Reply #10: daily dollar watch [View All]

[UpInArms]

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

Last trade 90.47 Change -0.78 (-0.85%)

Running Out of Gas

http://www.dailyfx.com/story/strategy_pieces/trade_or_fade/index.php?option=com_content&task=view&id=5248&Itemid=39

US economic news for last week was overwhelmingly positive with Consumer Confidence, ISM, GDP and most importantly NFP all printing at or above expectations, yet the dollar rally hit a wall. With market players now accustomed to nothing but good news from the US economy, the greenback will need better and better results to generate further gains. On the surface the dollar bulls argument couldn’t be more clear: US economy is operating on all engines, Fed is going to 5% money and the greenback will continue to rise as higher yields attract more and more portfolio flows.

Looking underneath the hood however, there may be some cause for concern and most of it centers around housing. Irrespective of latest data, the housing market appears to be slowing. Existing Home Sales dropped from 7200K expected to 7090K and although much ballyhoo was made over the fact the New Home Sales jumped 13% from 1200K to 1424, as Barry Ritholtz properly pointed out the margin of error in the data sample was larger (17%) than the actual increase making the whole report highly suspect. Perhaps most trenchant dollar bear argument was made by a reader of Jack Crooks Black Swan newsletter who noted: “If I am correct, the average Joe is going to get so beaten up this winter by enormous heating bills, higher minimum credit card payments, and, in some cases, higher adjusted mortgage payments. Even Merrill Lynch sees it: They estimated that the first two of the three I listed might add as much as $700 to the monthly budget. Nobody earning $53K per year can absorb $700 per month without suffering a dire personal recession. Multiply that times 100 million households and you've got a mess. My prediction: Spring seasonal housing market opens and the buyers are no shows. Game over.” The currency market may be thinking the same thing.

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Looks like there's going to be some shifting going on - is everyone preparing for the January 1 yuan change?

I won't be around long this morning, so have a great day everyone!