Well, I'm sure you read Terri's report on the subject (I refer those that have not read it to the link); but IMO, this is certainly a wait and see type of event. While a few middle eastern countries have already diversified away from the dollar and a few other have hinted at such, the GCC will have to vote on it all together to abandon the currency across the region. And on that point, there are a few nations that have strong ties with the US (namely Saudi Arabia) that would likely vote against such a move.

Even if they do all vote to diversify to a basket, the combined reserves across the GCC are really a drop in the bucket for the entire world's foreign reserves. And, if there is a vote to diversify, it would be done slowly and the resulting basket would most likely have a hefty percentage of dollars. What's more, as you suggested, the market on some level is already expecting this. With emerging markets capitalization rising, China and other countries registering record trade balances with the US and the dollar undervalued (a fact I'm sure many policy makers are taking note of - as they don't want to dump it at the bottom or would otherwise like to participate in a rebound), there are a number of factors that will keep the greenback buoyant through the GCC vote.

http://www.bloomberg.com/apps/news?p...sYk&refer=home

what is worse off than the current CREDIT crisis ? the plunge of the Dollar or Euro ?

nope, it is the CREDIBILITY crisis of FED. The FED has been flipflopping between inflation fighting and market saving.

Weeks ago, the risk between growth and inflation are roughly balanced. Yesterday, Bernanke said risk is on the growth side, and new trubulence seen.

what on earth is the FED apparatus doing ? Dun they have the PhDs, supercomputers, inside info to foresee the impending crisis ?

Yes, they may have smart people, but it is a political apparatus afterall.

Rub-in by securing the funding of Abu Dhabi, basically has subjected the FED to the control of Camels. No wonder, we see pictures of Camel-ass kissing on the national TV.

now, the American has chosen the middle-eastern over the Chinese. and the Chinese has gone to buy European assets, e.g. china insurance Ping Ann buying Dutch Fortis bank.

Soon the FED would be a market follower, and as I have predicted, the FOMC would be de-registered by 2010.

the market then would follow a new mechanism in pricing currencies and interest rates.

and let us call it the "Aragon LOTR Accord", wherby King Aragon would issue a new currency unit call "Aragon Dollar", it is priced according to the worth of the RING. The King would measure the Orgasmic level (ml of juice) of his concubine to introduce some fluctuation into the price

Expect more purcahses by Middle-eastern name in coming weeks (infact they are buying up the financials) to provide support to the Dollar. By allowing the gulf to buy US assets (when the democrats are sleeping), the Republican has bought the Gulf countries to re-assert the dollar-peg, hence averting a dollar crisis before the election. Islamic interests in the American corporate would double in year 2008. The Islamist have covertly assimilated into the American society, and infiltrated the American political apparatus, through its powerful lobbyist.

Euro would be into an extended period of whipsawing between 1.4500 and 1.4900 into 1st half of yr 2008. Now at 1.4730. when FED is leading cuts and ECB soon to follow.

Am expecting a 50bp cut on 11 DEC. Bernanke has given the confirmation after Kohn has started it. 2 talks by the top 2 guys, 2 cuts. 50bp.

Wallstreet Nostradamus
King Aragon Dollarpro

pretty boring so far! Euro seems to be stuck in a 30 pip range.

Agreed, though EZ econ data appears to be helping give the pair a bit of a lift. Flash CPI estimates for November surged to 3.0%, which is clearly well above the ECB's 2% ceiling. Unless Trichet wants to say 'screw the price stability mandate,' I think the ECB will have a tough time not raising rates in December or at least strongly suggesting that one is on the way.

Looks like a break above 1.48 will see a test of at least 1.4850/60, possible 1.49.

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Slappy, John, Ivanovich, David R.,

Where should I start?

The Terrible News About the USD

Unemployment is higher?-- Exactly how much higher would be a concern to you? Is a total of 22k extra unemployed in a counrty where we have 300 million people enough reason to devalue the dollar even a small percentage?

New home sales were disappointing?-- We actually saw an increase of, I believe, 12k homes over the previous month- is that disappointing? True, these figures are below the historical average but they are showing signs of stablizing which is better than making or beating "the forecast."

In my experience, the GDP numbers are more important than these two releases combined and I believe you know that the relatively hot 4.9% is actually darn good during a time when the rest of the world is downwardly revising their estimates.

Further, what good news about the EZ are you talking about? Were you talking about the wonderful-supertastic French consumer confidence or the out-of-this-world German investor confidence combined with the increased inflationary pressure indexes?

The Title of a Great Movie

As I said earlier, the EU has the perfect storm on its way. The ECB has no idea what to do because they have never seen such a scenario before in their short exsistence. Do they sit back and watch the Fed, the bank of Canada, bank of England etc etc cut rates while they increase theirs? Have you noticed the interest rate in America is still higher than that of the EU? Have you noticed how the whole "ECB will raise rates soon" sentiment has disappeared? That's because now they are realizing that storm surge is washing ashore and they have a crisis to advert. They now realize that the overly strong euro which they were so proud of is actually a double edged sword. They forgot that with a strong currency comes responsibility. (The US makes handling a strong currency look so deliciously easy. They must say, "If the US can do it, so can we!" How very wrong. There is an old proverb, presumptuousness is before pride...) Sure, the US was the first to get hit with this whole credit-crunch-subprime-fiasco while the EU was sitting back laughing out loud high and dry until... Well let's just say the strong euro is negativly impacting export growth from the EU. How long do you think that can last?

And what ever happened to the whole "China dumping USD/OPEC ordering euros in place of dollars" thing that was set to send the dollar in triple digit losses and make the whole world reject the dollar? Hell, even Gisele Bundchen doesn't want the dollar any more! (that was a leading indicator to sell the dollar but I must have missed it) Now that deserves a laugh out loud!

Weathering the Storm

The US economy weathered the whole tech bubble-9/11 mess without a hitch and people think this subprime mess (majority illegal immigrants) worth a few hundred billion is going to tank the US economy without impacting the rest of the world? Please! If any country/economy knows how to weather an economic storm, its America.

You may think I am some old, retired, Einstein-looking nut just slightly off his Texas rocker proclaiming his opinion, but rest assured, I have enough experience to know...

Down in by the boarder we say, "a rattlesnake that doesn't rattle isn't worth eating."

Something I would like to highlight especially to slappy- you say you sometimes trade based on fundamentals? If you did you would have a different stance and so would everyone else. This whole wild FX thing is based 90% on technicals which have been identified by 5% fundamentals, which they themselves have been exaggerated 23% by the remaining 5% bull.

Have you seen the riots in Paris? On KWTX 10, an analysts noted that globalization is leading to major problems for many countries but the least affected is America because generally 'the immigrants who come to America are proud to be American, whereas the immigrants who are flooding the Canary Islands, France, Germany, England are just there for the free ride.' Like it or not, but this kind of news plays a larger impact on the economy than you may think.

And contrary to what some say, the Fed IS CONCERNED with inflation; they are only allowing the only self-healing economy in the world to repair itself with time.

In any event, let's just all make some money- buy sell do whatever it takes. Even watching retail go long EURUSD is a turning point you must consider. Just remember when the EURUSD falls back to 1.15ish, you know old retired said it.

Retired, I feel compelled to argue a few points. I'll preface it by saying that I don't honestly believe the dollar is going to fall forever - it's bound to appreciate at some point. However, I don't think that moment is right now.

It's not a simple thing of unemployment rising a little bit in month, but the idea that it will continue to rise month by month and gradually push the unemployment rate higher. The idea that, for now, the labor market will not tighten further. I've attached a chart of historical unemployment rates going back to 1990...

One month of gains does not necessarily suggest that housing is stabilizing. New home sales were 'stronger' during the last reading as well, but as we saw yesterday, that was revised down to reflect a decline. The issue with this particular indicator is that it is revised almost monthly because of cancellations. Personally, I'd want to see a few months of gains before saying that it's stabilizing.

There's no doubt that GDP at 4.9% is a huge, impressive figure. However, that's Q3. Q3 doesn't matter. Q4 2007 and the rest of 2008 matters because as far as I know, most central banks try to implement monetary policy based on what the economy will do going forward.



So that's where I stand on those points. Sure, Europe may very likely be in trouble as well, but not nearly as much as the US. With EZ CPI possibly at 3%, Trichet cannot possibly cut rates in December..no way, no how. Once those price pressures ease...sure, it's very feasible. But not in December...no way.

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it is quite pointless to argue.
The FED gives you the answer. The answer is so obvious.

Even if Euro is at 1.5000, it is not of significance, bcos, you see companies like BWM is still making record profits. With a strong Euro, European companies have higher purchasing power in China, acquiring assets, produciton resources, labour to fuel their investment and channel their revenues back home to support jobs, social programs, etc.

With Merkel, Sakorzy making changes, they would reap the gain in coming yrs. The center of world economic, financial activities would shift back to Europe, when the twin Engine starts to roar again.

IT is not a losing game for Europe if Euro is strong.

It is not the European story. Though they make it seems like.

IT is the American story.

What is the American story ? With election year coming, the Rebublicans would try all means to bring in new liquidity into the stock market, especially thru oil monies, to burrow their way through historic high once more.
We would see a streak of 5-10 days of rises in stock market, as the bear run for cover. i.e. the USD would continue to be sold.

the Bulls intend to break through the top at SPX 1650. the 3rd attempt this yr.

Otherwise, it would be a truncated fifth wave for world markets.

I would not be surprised that Euro reaches 1.7000 by end of next yr.

SSI: Euro Short Positions Rise 11.2% from Yesterday

Friday, 30 November 2007 11:19:36 GMT
Written by Terri Belkas, Currency Analyst



quote ratio %long signal
EURUSD 1.47694 -1.41 42% Bullish
GBPUSD 2.06880 -1.23 45% Bullish
USDJPY 110.716 1.42 59% Bearish
USDCHF 1.11989 1.49 60% Bearish
USDCAD 0.99436 1.59 61% Bearish
AUDUSD 0.88763 1.39 58% Bearish
NZDUSD 0.77280 1.02 50% Bearish



EURUSD - The ratio of long to short positions in the EURUSD stands at -1.41 as nearly 58% of traders are short. Yesterday, the ratio was at -1.27 as 56% of open positions were short. In detail, long positions are 0.2% higher than yesterday and 11.2% stronger since last week. Short positions are 11.2% higher than yesterday and 11.1% stronger since last week. Open interest is 6.4% stronger than yesterday and 9.3% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD gains.

<< Longs no delta since yest. however up 11% since last week (they bought pull back targeting 1.5???) . Shorts also higher 11% thinking top is in and up 11% since last week also see that. Have to say more euro gains based on this as shorts are shorter, however charts are in consolid. on the < daily timeframes. Mixed to bias higher??>>

Euchre

Disclaimer Trading Currencies involves risk. Any opinion, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice.

It looks like we are one break closer to a medium term turn in EURUSD. The pair dropped 70 points in the last hour and broke through a rising trendline from the low on 10/30.

However, I'm still on the sidelines, since we still have a collection of support around 1.4690/4700. Just on my short-time frame charts, we have the rising 20-day SMA and a 61.8% fib. Although, I'm more concerned with the pivot level in the area that has proven itself to be significant.

If we can get a good move below 1.47, it would probably be good for another 100 point run; but that doesn't look attractive enough for me considering risk to the upside could just as easily be 1.4950 as it could be 1.48.

If we get below 1.46 though, a break of that trendline would be much more attractive.

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I was watching this breakout move in USDCHF and I didn't anything to jump on board... That was a clear continuation move and the wind up from the wedge was setting up for some considerable breakout momentum. My only concern was that it wasn't coming with a fundamental impact from the dollar, so I wasn't that confident in the potential follow through.

If we can get above 1.13, I would be more confident in the medium-term turn in USDCHF. I will be watching this closely to give me a clue on EURUSD and how it reacts around 1.46.

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USD short sellers covering position, when the USD rallying.

the cashflow has been too strong. 1.4700 to be broken quite easily, and then towards 1.4600.

intervention is coming in. market should push Euro lowered and then recover when Fed cut by 50bp.

next week, Euro would be a downhill move. Gold should be going for 750.
another good opportunity to buy back my Gold.

SPX should break 1500 quite convincingly and march towards 1600. DJ towards 13,500.

now the trend is reversed, strong equities, strong dollar. ideal for FED.
inflation core PCE next week should be tame.

I thought I'd just point out that today is the last day of the month and the eurusd monthly candle going to look like this....that is one long and ugly wick....and suggestive of a reversal.

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80 pips in 10 minutes, thank you USD.

Taking the rest of the friday off!!!!!!!

EURUSD - The ratio of long to short positions in the EURUSD stands at -1.09 as nearly 52% of traders are short. Yesterday, the ratio was at -1.27 as 56% of open positions were short. In detail, long positions are 12.2% higher than yesterday and 24.5% stronger since last week. Short positions are 3.3% lower than yesterday and 3.3% weaker since last week. Open interest is 3.6% stronger than yesterday and 6.6% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD gains.

We continue to see the "crowd" piling into the EURUSD long side. Watch out below.