It’s starting to remind me of queue of people trying to squeeze past one another, pushing toward the window to buy those last few concert tickets on sale. But in the $’s case, they ain’t pushing up to the window to buy.
To say the dollar trade is crowded is probably an understatement. Measured by the US Dollar index, the buck continues to channel down nicely…a tight orderly decline so far:
The declining of US consuming sentiment preliminary reading survey of University of Michigan in October to 69.4 from 73.5 in September affected negatively on the US stocks encouraging the investors to take some of their profits out of the equities market which supported the greenback to have a reprieve after a week of massive selling because of the improving of the investors risk appetite which have been underpinned by better than expected earning reports of third quarter which could store the investors confidence in the US financial sector after encouraging earning reports from JP Morgan, Goldman Sachs and Citigroup in the recent last week but last Friday disappointing BOA earning report could stave off this confidence and the stocks gain leading Dow to close the week below 10000 psychological level.
Matinee: Bank of England Official Inspires Buyers, Spooks Sellers
Pent-up demand and sellers running for cover explains the move by the British pound today. Granted, it was comments from a Bank of England official who sparked the move. Apparently the quantitative easing measures are working as well as they’d have hoped for when this strategy commenced earlier this year.
Richard Berner is an economist from Morgan Stanley—I think he is very good. He made these comments in a research note recently regarding the US dollar [our emphasis]:
“The dollar's recent slide is only reversing a substantial rise that began in mid-2008; on a broad, trade-weighted basis the dollar is actually 8% stronger than it was at that time and now stands about where it was two years ago. Moreover, the depreciation has been orderly and has been accompanied by falling, not rising, risk premiums. And one key driver - the US current account deficit, which is a measure of US external financing needs - has shrunk to less than 3% of GDP, or half its peak value.
Stocks, and currencies to a degree, meandered all day yesterday in wait of Intel to report earnings after the bell. The chip boys didn’t disappoint. Stocks jumped after hours on the news, rallied everywhere else overnight, and the S&P futures are up 14+ as I scribble. You likely know the rest of the story—currencies are no longer meandering and the pack is higher against the buck.
