EURUSD - Trends, Forecasts and Implications (Part 3) - page 873
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Market participants are waiting for the European Central Bank meeting scheduled for Thursday and many are counting on signals of an inclination to tighten policy from ECB President Jean-Claude Trichet.
>If Trichet mentions "significant vigilance", it would signal the likelihood of a rate hike in June and provide support for the euro. In that case, the likelihood of a strength test of 1.50 would increase, said Vasily Serebryakov, currency strategist-analyst at Wells Fargo.
Judging by the news-we enter a chocolate shop and everything is in sho-co-la-de ))))))) I wish I knew what conclusion to draw from this news.....
I think we should sit on the fence until next week.... this week is not going to be any big deal...... we'll just keep wandering back and forth (on the eurik, I mean)...
" Gold down 1% to close trading at $1538.50
" US consulting firm predicts ECB will raise rate three times before year-end
" US factory orders up 3% in March - higher than forecast
" Latest FOMC meeting heavily debated 'exit strategies': CNBC
" Portugal agrees EUR 78bn 3-year aid package with EU/IMF
" Geithner: China has begun currency policy reform; the world needs a faster pace of change
Tuesday was marked by falling commodity prices leaving players wondering whether it was just a normal profit taking and a number of positions being reduced after a strong rally or whether this was the start of a new downward trend.
Falling oil, gold and other commodity prices had a moderate impact on other markets as well. US equities declined. Most of the action on the currency front came from demand in the JPY and CHF and declines in AUD and GBP (which in addition to the general risk aversion trend came under pressure from its own weak economic data).
USD failed to strengthen against EUR and fell to record lows against CHF - such behaviour was an indication that market avoided buying USD even despite aggressive drop in silver prices.
Interest rates and commodities dominated the USD on Tuesday. Initially, rising German yields allowed EUR/USD to strengthen to $1.4890 at the European close. Uncertainty in the pair at these high levels and sharp declines in metals and oil triggered profit-taking in afternoon trading, bringing the price back to $1.4815. As a result, after Tuesday's sharp moves, the intraday trading ended around the same levels where the price finished the previous day (1.4830), a sign of indecisiveness/fatigue of the players.
I don't hear any banzai shouts this morning. It's no wonder the samurai have hidden their satori hanzas and started writing tanks without taking their noses off the scent of sakura trees. This usually lasts at least a week. Just kidding of course, I just don't see N225 and JGB trading, hence the sakura. ECB tomorrow and before rates the range of opinion is polar, from selling the hell out of it to buying it. I tried to buy yesterday on the euros coming in and they gave it down range like that. Ugh, it was scary, they even drew a new low. If you evaluate the upper consolidation (1.4750-1.49) intraday as a technical pattern, similar to the daily chart, then I understand where the negative assessment comes from. But I have to make three important points, just key ones may be. Firstly, you should never, under any guise, make an analogy with a daily on the hour - trust me on experience, it doesn't work. It's harmful and dangerous to your dept. The second is that just on the daley, since it rose above 1.43, I don't see it having any brakes at all. I have said this before. Therefore, if the Yevra turns somewhere and sometime, it will be of an eventful, random, unpredictable nature, if estimated today and in advance. In other words, as long as the daily mood is bullish. So far the Eurodollar has not formed anything technically audible for reversal, preliminary signs. I don't recommend selling it even to the nearest SUPP line in the 1.45 area. Third. Already said - bets tomorrow. Trichet is expected to speak sharply and with a hawkish wail. Yesterday, output prices outside the factory gates showed a nasty rise across the euro zone. A record since 2008. If Trichet does not even raise interest rates tomorrow - which is the logical surprise in my opinion, because if he says A, he says B - the probability of hearing "strong vigilance" in the briefing is close to one. And that's a verbal combination everyone has known since 2004-05, which has always meant an imminent rise in the stakes. Right. I remember a time when Trichet himself blew it. He said it himself and didn't raise it and then started mumbling, well the market knocked them in the forehead. But not for long and on a time scale not much. So, one or two days or how long, I forget.
Lately we are hearing more and more that the US dollar has run out of steam and can no longer serve as the world's reserve currency. Investors prefer to invest in precious metals rather than depreciating dollars. Last week the prices for gold reached the historical maximum of $ 1510.32 per troy ounce,
, and the silver prices exceeded $ 46 per the same ounce for the first time in three last decades. Now it is even ridiculous to recollect that under the Bretton-Woods agreement, which has opened an epoch of the world domination of the American currency, Washington guaranteed a free exchange of any dollar at the rate of $ 35 dollars for ounce!
The whole world is wondering: what is happening to the dollar, is the U.S. dollar is no longer able to perform the function of the world's reserve currency, what is waiting for the dollar and what can come to replace it for international payments?
One of the most controversial and at the same time the most successful investors in the world, multibillionaire George Soros, loudly stated that the U.S. dollar as the world's reserve currency (MRV) has had its day and its circulation in the world is declining. According to Soros, it is necessary to look for a replacement for the dollar in the world's financial markets, but he did not specify what currency he meant.
According to Soros, a replacement for the dollar should be sought for the world's financial markets, but he did not elaborate on which currency he meant.
- Oil. J. Soros said at the Bretton Woods II conference that oil is already a full-fledged reserve currency. The issue is that oil itself is traditionally priced in dollars, and its current prices largely reflect the state of the dollar and compensate for the weakness of the US currency.
As for the proposed alternatives, it is likely that the UN states would agree to create a world reserve bank, which would issue a common reserve currency and control the national exchange rates of its participants, before oil or the same Chinese yuan would replace the US dollar.
In view of this situation, a great quote comes to mind - "In dollar we trust!