Re: USD IMHO


Sep 8, 2012

 


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#22482 Sep 8, 2012

I believe that the USD is oversold short-term and should, at a minimum,

begin to stabilize or actually rise.



What does this mean for the TSP?



It means that the strength we've seen recently in the I fund should

begin to falter.....



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#22483 Sep 8, 2012

What's the basis for your belief? Don't you think the ECB's action this week is a significant change that fundamentally makes the I fund more attractive? If anything, it was the Euro that is oversold, no?

On Sep 8, 2012, at 11:47 AM, Sarah wrote:



> I believe that the USD is oversold short-term and should, at a minimum,

> begin to stabilize or actually rise.

>

> What does this mean for the TSP?

>

> It means that the strength we've seen recently in the I fund should

> begin to falter.....



----------------------------

#22484 Sep 8, 2012

I think the ECB's action this week WAS a significant event, in the past,

and that action is already cooked into the price.

--- In TSP_Strategy@yahoogroups.com, Don Libes don@...> wrote:

>

> What's the basis for your belief? Don't you think the ECB's action

this week is a significant change that fundamentally makes the I fund

more attractive? If anything, it was the Euro that is oversold, no?

>

> On Sep 8, 2012, at 11:47 AM, Sarah wrote:

>

> > I believe that the USD is oversold short-term and should, at a

minimum,

> > begin to stabilize or actually rise.

> >

> > What does this mean for the TSP?

> >

> > It means that the strength we've seen recently in the I fund should

> > begin to falter.....

>



----------------------------

#22485 Sep 8, 2012

US Dollar Hits Four Month Low,

Fed Decision to Make or Break TrendSaturday, 08 September 2012 03:45 GMTBy��John Kicklighter, Sr. Currency Strategist

From a chart of the USDollar or EURUSD, it seems as if the dollar hashad the floor ripped out from underneath it. However, selling momentumis not guaranteed. In fact, it will be more difficult to sustain thanmany may suspect. Whether or not EURUSD overtakes 1.3000 and AUDUSDsurmounts 1.0600 is a matter for the Federal Reserve to decide.



US Dollar Hits Four Month Low, Fed Decision to Make or Break Trend

Fundamental Forecast for US Dollar: NeutralThe dollar was dealt a heftyblow this past week. The Dow Jones FXCM Dollar Index (ticker =USDollar) dove into four-month lows Friday with its biggest single-daydecline in 10 weeks. From a chart of the USDollar or EURUSD, it seems asif the dollar has had the floor ripped out from underneath it. However,selling momentum is not guaranteed. In fact, it will be more difficultto sustain than many may suspect. Whether or not EURUSD overtakes 1.3000and AUDUSD surmounts 1.0600 is a matter for the Federal Reserve todecide.

To gain a sense of thedollar...s orientation over the coming week, we need to assess whatfundamental themes are in control and what will provoke theirdevelopment moving forward. Without doubt, the greenback...s greatestadversary moving forward is the Fed rate decision scheduled Thursday(16:30 GMT). Yet, why is the policy meeting so influential to thecurrency? Because of its direct impact on the currency...s value (viamoney supply and yields) and the sway over risk appetite trends (thegreenback is the market...s preferred safe haven currency).

Market-wide investorsentiment (risk trends) carries the greatest sway over the dollar andbroader capital markets. That is where the bulk of the benchmark...slosses were founded this past week. Though most would point to Friday...sAugust NFP figures as the most influential event for this past tradingcycle, the ECB rate decision was arguably the bigger coup. The Europeanpolicy authority decided to satisfy speculative demands / hope for moresupport to end the Euro-area...s two-and-a-half year debt crisis. In anew, unlimited bond purchase program (Outright Monetary Transactions .."OMT), the greatest single threat to global financial stability has beenput on ice.

Yet, lessening the pressureon the world...s largest collective economy doesn...t naturally translateinto a return to growth and competitive rates. Therefore, the progressmade was likely more of a relief rally than a genuine trend shift. Theprospect for a serious rally moving forward requires a renewed buyinginterest for carry currencies and equities (at or near multi-yearhighs). That responsibility falls to the Fed. Similar to the buildup inexpectations for the ECB to satisfy traders... expectations with the OMTprogram, the capital markets have shown a serious swell in speculationfor a fresh stimulus program from the Fed.

Establishing to what degreethe market is pricing in QE3 or an equivalent program by the centralbank is important to gauging the reaction. If the consensus were fornothing to happen at the meeting and the Fed stayed put, there would belittle reaction. Alternatively, if the masses were expecting alarge-scale asset purchase (LSAP) program and nothing was offered, themarket would react with a sharp selling of risky assets (Aussie dollar,Euro, US equities, etc) and sizable rally for the dollar.

With the dollar...s abruptdrop through the end of this past week (as well as the buoyancy in goldand Treasuries), it is clear that the market expects more externalbuying from the world...s largest central bank. Expectations werecertainly amplified by the disappointing headline NFP reading, whichrose by ...only... 96,000 jobs. Yet, looking at the S&P 500...s four-yearhigh, gold...s surge above 1700 and the dollar...s sharp tumble tomulti-month lows; there is a sense that the market is expecting too muchfrom the Fed .." both in terms of scope and influence of further supportschemes.

Setting the scene, in thelead up to the event; the masses will throttle back in adding intoexposure ahead of announcement .." that will translate into a tamed trend,but it could also amplify volatility. There are three components to theevent: the policy decision (16:30 GMT), the release of the fundamentalforecasts (18:00 GMT) and Chairman Bernanke...s press conference (18:15GMT). Any new program would likely come from the decision itself, sothat is make-or-break. And, anything short of a blatant QE3-like programcould be construed as a ...disappointment.... Meeting expectations isdifficult enough given current levels. Beating them could be nearimpossible. .." JKwww.dailyfx.com/forex/fundamental/forecast/weekly/usd/2012/09/08/US_Dollar_Hits_Four_Month_Low_Fed_Decision_to_Make_or_Break_Trend.html







--- In TSP_Strategy@yahoogroups.com, "Sarah" sarah_oz@...> wrote:>> I think the ECB's action this week WAS a significant event, in the past,> and that action is already cooked into the price.> > --- In TSP_Strategy@yahoogroups.com, Don Libes don@ wrote:> >> > What's the basis for your belief? Don't you think the ECB's action> this week is a significant change that fundamentally makes the I fund> more attractive? If anything, it was the Euro that is oversold, no?> >> > On Sep 8, 2012, at 11:47 AM, Sarah wrote:> >> > > I believe that the USD is oversold short-term and should, at a> minimum,> > > begin to stabilize or actually rise.> > >> > > What does this mean for the TSP?> > >> > > It means that the strength we've seen recently in the I fund should> > > begin to falter.....> >>







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