Reply #1: daily dollar watch

[UpInArms]

http://quotes.ino.com/chart/?s=NYBOT_DXY0

Last trade 81.08 Change +0.23 (+0.28%)

Dollar May Drop to Record at Start of 2005, Survey Indicates

http://quote.bloomberg.com/apps/news?pid=10000006&sid=abiPP6E9ptFA&refer=home

Jan. 3 (Bloomberg) -- The dollar may drop to a record against the euro in the first week of 2005 on speculation the European Central Bank won't try to halt the 12-nation currency's advance, according to a Bloomberg News survey of 58 traders, strategists and investors from Tokyo to New York.

About 70 percent of the participants polled on Dec. 30 and Dec. 31 advised selling the dollar against the euro, the most in more than a month, up from 60 percent a week ago. Versus the yen, 50 percent said to sell the dollar, up from 43 percent.

The dollar was the worst-performing major currency against the euro in 2004, losing 7.7 percent. The euro's advance will continue as long as ECB President Jean-Claude Trichet indicates he isn't ready to sell the currency or lower interest rates, said Alex Patelis, a currency strategist at Merrill Lynch & Co.

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``The market is coming back full force this week and the sentiment is to try to keep pushing the dollar down since the ECB is not doing anything to put a stop on the euro's rise,'' said Melendez. He advised selling the dollar against the euro and the yen this week. A dollar's drop past $1.3870 per euro may spur further losses to $1.40 in coming weeks, he added.

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Another good year, providing the dollar doesn't sink too fast, rates stay reasonable

http://www.latimes.com/business/investing/bal-bz.ambrose02jan02,1,2711455.column?coll=la-utilities-business-money

(free registration or try www.bugmenot.com)

excerpt:

One of the more worrisome is the weak dollar, blamed on concerns over the huge U.S. trade and budget deficits. Since peaking in early 2002, the dollar has fallen about 28 percent against major currencies. Just last week, the dollar hit another record low against the euro.

On the upside, a weak dollar boosts exports because U.S.-made products become less expensive for foreign consumers. It also makes imports pricier, so American consumers are more likely to shop at home. As demand for U.S. products rises, companies here will be able to hire more workers and invest in new equipment, and the economy will strengthen.

For those reasons, most investors would be comfortable with the dollar gradually declining further, which would follow expectations. But a sharp, sudden drop could spell serious trouble.

Market strategists question how long foreign investors will be willing to put money into the U.S. markets if they end up getting burned when they convert dollars into their own currency. And what happens if foreign lenders tire of buying up U.S. Treasury bonds, whose value drops along with the dollar?

"We might be forced by events to raise our interest rates to continue to attract capital. And it might come at a time when we are not really inclined to raise them at too fast a pace," said David Darst, an investment strategist with Morgan Stanley in New York.

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and now a "word from our sponsors" - the cheerleading section:

DAILY COMMODITY MARKET COMMENTARY

Financials: Bonds broke through the initial target of 111 yesterday as we expected on the near term. Traders that have not been working the Put Options since the 113 -114 level should be waiting on the sidelines and hoping for a rally to build long term Put Positions in June. Those with profits on the Puts should lighten up the positions and re-enter on a bounce up to 112-15. The bottom of the 5 month trading range should be tested soon and traders should be looking for rallies to build long term Put positions. Major long term top being formed around the 113 to 114 level as rates move higher, Oil prices peaking, and the economy rebounding. Stock Index's have stalled around resistance of 1215 in the S&P and 10,900 in the Dow, traders should be looking for the markets to plow those numbers before the end of the week. The Index's are trying to tell us that something good is around the corner maybe Oil prices are ready for a free fall or hopefully some positive news out of Iraq. As we have been recommending for the past few weeks we are watching for interday breaks to get long futures. Traders looking to play the Stock Index's should be using tight stops and not be afraid to get out quickly. The S&P 500's breakout out looks incredible on the monthly charts and should not be under estimated going into next year. Near term resistance is 1215 in the S & P and breaking there should target 1225 to 1250. The Crb Index stopped us out yesterday at the 284 level and traders that believe the Crb Index is overpriced at 23 year highs should look to sell the Feb. Crb Index at 283 or better this morning. Multi year highs have been established near 290 and traders should be looking at long term puts on rallies. The end to the historical bull run in commodity prices is near. When the U.S. Dollar gets a solid footing watch the Metals and other commodities begin to react violently on the downside. The 23 year high near the 290 level should not be tested for many years to come. After, an almost strait climb higher over the last 3 years we would be looking for the market to correct severely going into next year.

Currencies: Watch for the British Pound to take out the $1.90 support level on the near term. Closing below there should target the $1.85 level or a deeper correction. The Dollar continues to hold around the 81 cent level and traders should be looking to build long postions from these historical lows. We are looking for the market to bottom off these numbers either a blow off move down or a v-shaped bottom to emerge. Watch for the market to move quickly up to the 83 to 83.5 cent level by the end of the week. Futures traders should continue to look at the Euro and be selling above the $1.34 mark and looking for an objective of $1.27 before the end of January. Massive tops in foreign currencies have started to forge and being led by the Aussie, C. Dollar and British Pound, traders should now be focused on Euro to break next. Traders should be looking at March Put Options across all of the foreign currencies. Rates are moving higher and watch the Dollar follow interest rates. A weak Dollar will cause the global economy to unravel and traders that believe that will happen should look to buy assets at 16 year highs like Gold ( we will not). Traders should be expecting the other currencies to begin some violent corrections soon.

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and back to reality

Forex - US dollar sustains gains vs yen, euro in thin trading in Singapore

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?pv_noticia=1104733508-9e32d306-04515

SINGAPORE (AFX) - The US dollar held onto gains against the yen and the euro in thin trading in Singapore with major markets such as Japan and Australia still closed for the New Year holidays, dealers said

At 2.00 pm (0600 GMT), the dollar stood at 103.08 yen from 102.45 earlier, while one euro was buying 1.3442 usd compared with 1.3527 earlier

According to United Overseas Bank (UOB), the strengthening of the yen was in part due to the recovery of the euro/yen from record levels as market participants took profits. Apart from that, UOB believes news that Japan's Ministry of Finance (MoF) indicated that they refrained from market intervention for nine months despite the dollar reaching a new low of 101.8 yen in early December had also contributed to the rise

"Despite renewed comments on the possibility of intervention over the New Year holidays, some expect the MoF would not intervene unless the dollar/yen declines to sub-100 on a sustained basis," UOB said in a research report. The euro, meanwhile, is expected to test new highs amid persisting concerns over the US fiscal and trade deficits

"With players remaining focused on the US structural imbalances which would probably involve a weaker US dollar as part of the adjustment process, the US dollar is expected to resume its downward trend, with euro/dollar on sight to test 1.3750 this week," UOB said

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Great 'toon, Ozy!

Have a Great Day Marketeers!