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What's with the US dollar?!

  • #341
  • Apr 19, 2011 5:31pm Apr 19, 2011 5:31pm
Quoting Low
And here's a challenge. If Paul is so astute, find me an article by him without "_________ reasons the world as we know it will end" in the title, or a movie analogy.
Paul Farrell may be a misanthropic grumpy old fart. So what? What's of interest is the evidence presented or indicated. I ran this article by a most trusted analyst friend of mine, somebody who knows most of what's worth knowing about commodity and currency markets as far as the fundamental big picture is concerned. His brief comment was "can't disagree with any of that".
  • #342
  • Apr 19, 2011 9:05pm Apr 19, 2011 9:05pm
Quoting medici
Paul Farrell may be a misanthropic grumpy old fart. So what? What's of interest is the evidence presented or indicated. I ran this article by a most trusted analyst friend of mine, somebody who knows most of what's worth knowing about commodity and currency markets as far as the fundamental big picture is concerned. His brief comment was "can't disagree with any of that".
Yes.....but.....

He's been passing off that drivel as journalism for going-on 3 years, and sure, eventually he'll be right, but that's doesn't make for good financial reporting.

He's still employed because all the doomers love to comment on his stories, and clicks=ad views.

If I tried I could probably find another 40-50 bloggers, writers... whatever, saying the same things. It's not informative.

If the dollar does truly collapse, everybody will be surprised at the "when". Once it's been digested we will all begin trying to find out how we fit into the new paradigm. Even those who believe they are "prepared" will struggle. And all the doomers who wish they could say "see! I was right!" will be so irritated by the unavailability of the internet.
  • #343
  • Apr 21, 2011 2:53am Apr 21, 2011 2:53am
The USD tanking is just a way of redistributing wealth from the United States to the rest of the world.
  • #344
  • May 5, 2011 4:34am May 5, 2011 4:34am
gspajon: maybe this will help explain things; rule number one in trading- there is NO explanation!
Trading stocks, forex or commodities is not science. Therefore, one should never expect a specific reason for markets phenomena. Stocks rose because of the positive NFP results. US markets and the USD usually go the opposite direction because stocks have to keep their real price. However, it is a fundamental explanation so it doesn't always happen in practice...
Hope this clarified things a bit. Good Luck and Happy trading!
  • #345
  • May 10, 2011 6:52am May 10, 2011 6:52am
It seems people are forgetting the fact that Central Banks can manipulate exchange rates by buying/selling currencies themselves. As much as people (especially traders and economists) hate to admit it, the so-called "fundamental" economic indicators have no bearing on spot rates whatsoever. Until economics is based on REAL economic models and not on policy ones, anything that is said should be taken on a grain of salt.
  • #346
  • May 10, 2011 12:02pm May 10, 2011 12:02pm
Quoting [Sniper]
It seems people are forgetting the fact that Central Banks can manipulate exchange rates by buying/selling currencies themselves. As much as people (especially traders and economists) hate to admit it, the so-called "fundamental" economic indicators have no bearing on spot rates whatsoever. Until economics is based on REAL economic models and not on policy ones, anything that is said should be taken on a grain of salt.
Not true.
  • #347
  • May 11, 2011 7:55am May 11, 2011 7:55am
Quoting medici
Not true.
The spot rates acting on the supposed "fundamental" economic factors is based on trader reaction and sentiment rather than variables following supposed economic models. Let me ask you this, why is the dollar gaining ground in today's news when the trade deficit has widened instead of the other way around? Yeah, thought so. Until economics becomes real science with sound economic models instead of policy ones, I will stick by my argument.
  • #348
  • May 11, 2011 8:35am May 11, 2011 8:35am
Quoting [Sniper]
The spot rates acting on the supposed "fundamental" economic factors is based on trader reaction and sentiment rather than variables following supposed economic models. Let me ask you this, why is the dollar gaining ground in today's news when the trade deficit has widened instead of the other way around? Yeah, thought so. Until economics becomes real science with sound economic models instead of policy ones, I will stick by my argument.
As usual one is asked to defend statements never made.

And you have not presented any argument whatsoever for your erroneous claim that 'the so-called "fundamental" economic indicators have no bearing on spot rates whatsoever'.
  • #349
  • May 11, 2011 9:17am May 11, 2011 9:17am
Quoting gspajon
This month's NFP is the best number in almost 3 years. 216K jobs added and the majority of those in private sector jobs....


1st of all I do not mean to sound condescending. It is my least intention to show people im better than anyone here. So if i offend anyone, i apologize in advance.

With that out of the way, This has been going on since the recession in 2008. I realized back then whenever good news comes out of the US, most of the time will lift the US stock market. And when US stock market lifts, USD weakens. Its kinda the opposite of what's been taught to me by my previous FOREX gurus and what you might have read from babypips. This started happening since the 2008 recession (correct me if im wrong). Honestly im kinda surprised that most people in FF are still oblivious to this. It was obvious to me when it started in 08.


I really dont have a proven explaination to this. But I do have an untested theory.

You have to remember that US is a Deficit - Credit driven economy. It is a total extreme end than other "savers" economy like say, China where their savings provides valuable resource of re-investment into the economy. Savings=investment. But in US, savings doesnt equal to re-investment. US economy clings on Consumerism and government spending rather than savings. When you have an economy that is largerly fueled by consumers rather than savers, that equals to ====== Ballooning US DEBT.

Think of it this way, the higher the stock market goes, the more leverage people put on their investment. the more leverage, the more credit is needed to be created. Same goes to Paris Hilton (you can insert American shopper's name here) going shopping. The more she shops, the more she needs a credit line.

You can claim that other countries in the EU and UK is in HUGE debt as well. I have 2 possible explanation to this. 1st, historically America has the habit of blanketing its economic problems by QE or keep on printing money until the problem goes away. But other countries doesnt really have that options (well, not too much) since their currency isnt the world's reserve currency. I mean, even USD's closest contender, the EURO, consists of only 30% of total worldwide global transaction. 2nd, Investors sentiment/attention has been towards US Quantitative Easing. Most investors (err.....i think) want US to boost the world economy back into normalcy (2000 - 2007 pre crisis state where the whole world produce, US consumes) I mean, can you believe it, that there are some economist (Neo Keynesian) that thinks US needs more QEs at this point (Paul Krugman)????

Thats my 2 cents......its just a theory i have but i might be wrong. If you think differently, you can enlighten me. Thanks
  • #350
  • May 11, 2011 9:55am May 11, 2011 9:55am
Quoting medici
As usual one is asked to defend statements never made.

And you have not presented any argument whatsoever for your erroneous claim that 'the so-called "fundamental" economic indicators have no bearing on spot rates whatsoever'.
Read again:

Quote
The spot rates acting on the supposed "fundamental" economic factors is based on trader reaction and sentiment rather than variables following supposed economic models.

Foreign Exchange trading is exactly that. But I guess you didn't really read through did you? By the way, still think that the widening US trade deficit had any effect on the US dollar spot rate today whatsoever? ROFL
  • #351
  • May 11, 2011 11:10am May 11, 2011 11:10am
Quoting masakmerah
I realized back then whenever good news comes out of the US, most of the time will lift the US stock market. And when US stock market lifts, USD weakens. It is kinda the opposite of what's been taught to me by my previous FOREX gurus and what you might have read from babypips.
I really dont have a proven explaination to this. But I do have an untested theory.

Thats my 2 cents......its just a theory i have but i might be wrong. If you think differently, you can enlighten me. Thanks

This relationship has caused me such a headache, I FINALLY understand it I feel to its entirety. I started trading in 2008, September, blew up my first account shortly after. I naturally figured that, oh well since the stock market is going down, the US dollar must fall as well....and then BLAM. Dollar strengthens, along with the Yen, and I'm left confused.

So right now, the US has the lowest rates along with Japan, they are used as the main funding currencies to buy risk assets, so Dollar gets bought when Risk get sold and vice versa. If the US raised interest rates, then it would fall more in line with a stock market positive correlation, than negative which we've seen since then. I've also noticed that this correlation fluctuates, for example last year during this time, the EURO was flailing as well, but the stock market was rallying AND the Dollar Index was going up. By the end up summer though, the same risk on/USD weakness pattern emerged.

I think we're going to see 1 of three things happen: A: most probable, we Range here, with dollar index bouncing between 70 and 90 for all summer, as well as the market index. B: Dollar Rallies, stock market corrects C: Dollar index drops to 60-50 range, Gold/oil spikes along with the market (and then everything crashes as the USD is now worthless).
  • #352
  • May 11, 2011 2:36pm May 11, 2011 2:36pm
Quoting [Sniper]
Read again:



Foreign Exchange trading is exactly that. But I guess you didn't really read through did you? By the way, still think that the widening US trade deficit had any effect on the US dollar spot rate today whatsoever? ROFL
Fine, but your first statement is still incorrect. Do think that macro funds are making money out of pure luck?

And you've added another incorrect statement to boot.

Why not base your claims on evidence and argument? And why not talk about things you know a little bit about?
  • #353
  • May 11, 2011 4:52pm May 11, 2011 4:52pm
Quoting medici
Fine, but your first statement is still incorrect. Do think that macro funds are making money out of pure luck?

And you've added another incorrect statement to boot.

Why not base your claims on evidence and argument? And why not talk about things you know a little bit about?
Until you know what the study of Economics is and how far a cry it is from the real hard sciences, you have nothing of value of add in this discussion. Get back to me once you know the difference between what theoretical economic models really are (which is where your "fundamentals" are based on by the way) vs the scientific models found in the hard sciences and why they (the fundamentals) can never be a reliable predictive indicator.

Until then, good luck wondering why the "fundamentals" really doesn't work as what was expected out of them. And seriously, are you just going to tell me I'm wrong without as so much providing a refutation? If you're really just inching to start an argument, you can p!ss off. Thanks, I won't be bothered
  • #354
  • May 11, 2011 4:57pm May 11, 2011 4:57pm
Quoting [Sniper]
Until you know what the study of Economics is and how far a cry it is from the real hard sciences, you have nothing of value of add in this discussion. Get back to me once you know the difference between what theoretical economic models really are (which is where your "fundamentals" are based on by the way) vs the scientific models found in the hard sciences and why they (the fundamentals) can never be a reliable predictive indicator.

Until then, good luck wondering why the "fundamentals" really doesn't work as what was expected out of them. And seriously, are you just going to tell me I'm wrong without as so much providing a refutation? If you're really just inching to start an argument, you can p!ss off. Thanks, I won't be bothered
I am quite familiar with these things, thank you. As for adding value, your main contribution seems to be that of being a vivid illustration of the relevance of Bertrand Russell's words:

The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt.
  • #355
  • May 12, 2011 3:51am May 12, 2011 3:51am
Quoting medici
I am quite familiar with these things, thank you.
Nah, you don't. Let's be honest, you have no idea how scientists actually come up with their theories and you have no idea how economists come up with theirs. Until then, go read a book and educate yourself instead of coming up with quotes and telling people you disagree with them without even providing any explanation.
  • #356
  • May 12, 2011 10:02am May 12, 2011 10:02am
Quoting [Sniper]
Nah, you don't. Let's be honest, you have no idea how scientists actually come up with their theories and you have no idea how economists come up with theirs. Until then, go read a book and educate yourself instead of coming up with quotes and telling people you disagree with them without even providing any explanation.
As you insist, perhaps I should tell you that I have published research work both in theoretical quantum mechanics and mathematical finance, and that I have plenty of experience in the industry as well.

What I object to is your cocksure erroneous claims, without any evidence or argument to support them. Until you provide, there is no need for anyone else to explain anything. So you are the one with the burden of proof, my friend. Go as theoretical as you like, I'll be with you all the way
  • #357
  • May 12, 2011 11:06am May 12, 2011 11:06am
can someone tell me what just happened? the dollar index just lost 0.3% in 10 mins
Lets Soar The Sky
  • #358
  • Last Post: May 12, 2011 12:13pm May 12, 2011 12:13pm
Quoting soartosky
can someone tell me what just happened? the dollar index just lost 0.3% in 10 mins
Speculators, banks and traders made the dollar lost 0.3%. No fundamentals there. If you looked at the news, there was nothing of news value to suggest the dollar should fall. Foreign exchange is rigged and only banks, speculators and traders with billions of dollars to spare can move the market as they wish. Don't fall for the crap that the financial world follows predictable patterns given certain variables like those in the real sciences (where 2 Hydrogen atoms combined with 1 oxygen atom will give you water - always) because they do not.

The best you can do with forex trading is just follow the trend. Until someone can really create a sensible economic model based on empiricism that follows the rigid rules of the scientific method, don't pin your hopes up that one will truly understand the market and predict outcomes.
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