Friday, Aug 06, 2010
How the once-mighty dollar has fallen -- again.
Fortune: Dollar near bear market territory
The dollar tumbled against the yen and euro Friday morning after July's U.S. job report brought more bad news. Private sector employers added just 71,000 jobs last month, and total nonfarm payrolls contracted more than expected.
"Overall, unquestionably a disappointing report," economists at Capital Economics in Toronto wrote.
Posted by mark @ 04:02 PM (1177 views) Add Comment
22 Comments
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1. techieman said...
Lara puts the $ "bear" move in context....in glorious technicolour - and remember this was before todays market action...
http://www.elliottwaveforex.com/2010/08/06/usd-index-forex-elliott-wave-analysis-%E2%80%93-4th-august-2010-video/
2. str 2007 said...
Ah Lara
Enough to give any red blooded male an extension to his 3rd wave.
At least you get some down movement in the markets from time to time, which is more than can be said for house prices at the moment - it's like watching paint dry this HPC.
3. financial planner said...
$ has bottomed out today. At its 200 day. As $ now rises, € and £ fall and stocks plummet. Watch.
4. str 2007 said...
Hi FP
Is that all stocks US & UK ?
Btw I remember your 'time to buy boys and girls' comment in march '09 which was frankly spot on.
Any idea of 'plummet' size ?
5. jack c said...
I was never sure what financial planner meant 'time to buy boys and girls' - houses or shares or what - perhaps he'd care to expand upon this and his latest prediction
6. miken said...
Why would anyone who worries about (or monitors) house prices care about the US exchange rate?
I don't give a d@mn about the US. I feel the exchange rate is meaningless information and irrelavant
for the many followers of this website because the average FTB isn't dabbling or gambling with currencies.
7. str 2007 said...
I care, because I feel all markets are intertwined in one way or another.
I strongly suspect weekness in GBP earlier in the year has made alot more people than usual holiday at home in the uk.
This will have taken alot of pressure off people who may have sold holiday lets if they hadn't had many bookings this year.
Obviously house prices don't move up and down as quickly as stock markets.
But take a look at what happened to both in March '09. The stock markets moved first.
I'm no expert but I have heard elsewhere that dollar moves against the US markets ie it goes down when the markets go up and vice versa. (Maybe someone could elaborate on that for me).
Anyway, if the stock markets tanked massively it's hardly likely to inspire homeowner confidence is it.
If the dollar reaching a certain level of support/resistance is a pre-curser to that, then I'm interested to know about it.
Time will tell I guess.
8. Jonny M said...
@ 6. Afraid i must disagree. I am one of these FTB waiting in the wings, until the day comes when i dont have to pay 200k for a crappy little 2 bed flat. I have saved hard over the last 5 years to get myself a tidy deposit, and now find myself in the position of needing to invest it or see it decline in real value, what with inflation running higher than saving account rates.
Thanks to the posts and especially comments from people on this site plus my own reading i have managed to get a much better picture of the financial world and hence have made some very good (hope that hasn't jinxed them) investments with my "deposit".
So in a round about way these at first seemingly off topic articles can be very relevant to FTB like myself.
And then theres also the argument @ 7 haha.
First post so go easy ; )
9. techieman said...
"I was never sure what financial planner meant 'time to buy boys and girls' - houses or shares or what - perhaps he'd care to expand upon this and his latest prediction" Jack he meant the stock market. And really that was a shame. If he had just included HPs (which was certainly sayable) then he would have had much more credibility. Opportunity missed.
STR2007 - he was actually a few days and a few hundred points out [do a search if you like - a good call nonetheless]. As for now he might be a bit early here too. Mentality in the US is still buy the dips and it didnt break support today. Its actually easier to say that now the market is closed, but brave call nonetheless. I think we are very close to the top nut i would have liked to have seen S&P at around 1140 - 1160 and FTSE 5500, and THEN some sort of confirmation (break of a trendline / japanese candlestick pattern etc).
I am actually glad there wasnt the follow through - as for the USD i think that Lara is right - a move to new lows maybe finished today - a retracement (dollar stronger) then one more push down - which would break the prior lows. I dont think it will get as low as she thinks but after that then the dollar is (as FP says) a screaming buy.
10. techieman said...
STR2007 - see Daneric's clusters which he has had for a long time. http://4.bp.blogspot.com/_TwUS3GyHKsQ/TFxxObDoFmI/AAAAAAAAG6A/JAaPX0H8ZOU/s1600/spx30.png
and here is the dow
http://2.bp.blogspot.com/_TwUS3GyHKsQ/TFxyByGIWQI/AAAAAAAAG6I/XgR_WrXJoq8/s1600/djia.png
they actually rejected the sell off twice today - thats bullish -fact, but probably weaker hands and going toward exhaustion. A classic trap - as i have said the bears get convinced to turn neutral and then bullish before the falls come because thats HOW it works.
As usual Daneric is the smart cookie:
"QE2 will be a disaster if they execute it. Sure the market may have one final short-squeeze spasm, but once the buyers wane, I expect a flash crash event.
They would be fools to do it." - he is absolutely right, the public are realising it and the politicians are beginning to realise the public realise it.
http://danericselliottwaves.blogspot.com/2010/08/elliott-wave-update-6-august.html
11. techieman said...
ive just had a look around the time: march 2nd:
Anyone want to guess when will FTSE hit 3500?
http://www.housepricecrash.co.uk/newsblog/2009/03/blog-anyone-want-to-guess-when-will-ftse-hit-22093.php
News for the great unwashed
http://www.housepricecrash.co.uk/newsblog/2009/03/blog-news-for-the-great-unwashed-22177.php
Cant find FPs at the moment - pity.
12. techieman said...
Without going on about it -well suppose i am - here is Dan's chart of USD index. Shows where we are v. 200DMA (red line) which FP talks about :
As of close last night:
http://4.bp.blogspot.com/_TwUS3GyHKsQ/TFyAfHmZbVI/AAAAAAAAG6g/0XB1Wkmzh1w/s1600/usd.png
As of 15th July :
http://4.bp.blogspot.com/_TwUS3GyHKsQ/TD-RjEKmxHI/AAAAAAAAGXg/RYlJcMPAUAY/s1600/usd.png
[so was that a fluke?]
Here is what he said last night:
"The dollar sentiment is low. The wave structure looks nice as it is. The Euro has now corrected some 44.5% which is a more respectable wave (2). However again, the Euro would look better nearer 50% corrective.
Despite the nice wave structure, no firm turn yet on the dollar."
So in swummary, if you have been short dollars or long the stock market now is the time to reduce your exposure. Personally that means time to Build short positions, on the understanding that there may be some pain first. In fact to be safe i would be looking for one more up move in the stock markets and one more down move (after a retrace per Lara) in the USD, but not to as low as she is now saying.
13. financial planner said...
All major st mkts are highly correlated.
I see retest of March 09 lows by next year. 900 S&P by October.
There are members of this site who do not realise that I work in markets of all kinds.
14. techieman said...
i think (but dont know) that you (FP) will be vindicated in all yours long term forecasts.
Just think (well know) how notoriously difficult it is to call major tops and bottoms to the week/day/hour /minute/tick... As Daneric shows on his charts there are areas to concentrate on for turning points.
The market is there to make fools of all of us...
15. techieman said...
"There are members of this site who do not realise that I work in markets of all kinds." - actually there are (newer) member of this site who dont know who you are :).
16. str 2007 said...
Morning All
For what its worth I thought the markets were going to go lower than tey did back in March'09, I thought upper 2 rather than mid 3's for the FTSE, as to me things seemed that bad. However I was wrong. I recall techieman thinking there was the possibilility of a re-test of those lows, although time frames are always hard.
I certainly wasn't expecting the 'V' shaped recovery we've had to date. (Maybe this is something to do with S2R1's theory of how things are reacting more and in shorter timeframes as time goes on).
The further (in time) it gets away from those lows the less likley it seems as things just seem to slowly improve.
Banks are making profits again (all be it with the help of very low interest rates, Greece is out of the news and even the biggest oil spill known to man seems to have miraculously vanished overnight.
And would the powers that be who may claim to have rescued the world from the brink allow another enourmous crash without stepping in with a yet unthought of extrordinary measure ?
It's amazing some can be so bullish with the potential of a big fall in the offing , yet I guess they just don't realise that or understand why some of us could still be so bearish. Which is what makes a market I guess.
Keeping ones head down, working hard and avoiding bad debts is the way forward, tough as that maybe.
recaptcha : graft poorhouse
Techieman
Be sure to let me know when those markets are a sreaming sell won't you.
Also when that dollar is a screaming buy or I suppose the Euro/GBP a screaming sell again Unless of course it's the Yen the dollar will be devalueing against.
Does this reversal make sterling in gold/silver still a good hold/buy ?
17. techieman said...
hi STR 2007 . Yes you are right about re-testing those lows - although in some of the postings in March i did say a "Big retrace" and that we were overdone. I also said once 3950 ftse had been breached we had a way further to go. BUT no i didnt think we go THIS far back up.
The point you make about "The further (in time) it gets away from those lows the less likley it seems as things just seem to slowly improve." is the classic reason why it can go lower and re-test those lows. You illustrate the point further when you say you thought in march 09 it would go to the 2s. the point is when it looks really really bad, its probably a good time to buy (unless its the end of the world and then who cares?) and when it looks like things are improving its probably time to sell because "its" already happened.
Personally i think if you are going to go long the $ now is a good time to start to build a war chest. Sure you may have some pain first.
I can only tell you that i dont know exactly where the low will be - and we may have already had it. I follow Euro / $ and cable. If i KNEW i would put everything on it and sit back and relax.
Aside from Friday i have basically sold the dollar more or less every day for the last couple of weeks, but now to my mind the risk reward isnt so favourable - see the 2 links to charts at 11. So i will probably look for some kind of bottoming formation.
As for silver / gold - i have said on here many times, that personally i have made my money from a long term gold holding and realluy dont have an interest either way. I think though Gold bugs (i do have some left) resolve will be tested in the next few months, but i could be wrong on that. The point is i really dont care one way or the other.
If i had shares i would liquidate and buy a short etf. if it goes higher i would buy more of the short etf. i mmight even buy the geared short etfs.
18. techieman said...
str 2007 - i have to go out now, but take a look at the post i dedicated to Jack C re the FTSE.
Recap: errs me?
19. jack c said...
Thanks for the clarification gents - I'll have a look at TM's posting later today when I have a bit more time. I'm not however picking up on any other predictions elsewhere of stock markets plummeting (ideally this needs quantifying as per str2007 request of Friday, August 6, 2010 06:19PM above) - I'll now gather a few more opinions and report back.
20. str 2007 said...
Cheers techieman
I'll have a loom at your next post
21. miken said...
Today's big hint for those who aren't interested in housepricecrashes, what's wrong with http://uk.messages.finance.yahoo.com ?
22. techieman said...
miken - is ignorance still considered a virtue these days? Have a good one!