Recovering (US) dollar

[Francesca R]

What goes down (as far as real exchange rates are concerned) usually eventually comes back up.

(OK--so it has a long way to go yet . . .)

Euro extends losses, falls below $1.51 / Pound falls more than 1 pct vs dollar, hits 17-mth low / Canadian dlr at 1-yr low after weak jobs data / Swiss franc hits 5-month low vs dollar / Aussie dlr slumps to 6-mth lows on rate cut bets / Singapore dollar at 5-mth low on growth outlook / S.Korea won hits 1-month low, intervention spotted / Russian rouble falls on weak stocks, strong dlr / NZ dlr at 11-month lows vs buoyant USD, debt gains / S.Africa rand 1 percent softer against dollar

PS--there was an exception:

[Chinese] Yuan rebounds despite globally strong dollar

In economic news:

TOKYO, Aug 8 (Reuters) - Japan's corporate bankruptcies rose to their highest level in five years in July while sentiment among service sector workers fell to a nearly seven-year low, adding to a growing view that the world's second-largest economy is now in a recession.

BERLIN, Aug 8 (Reuters) - German manufacturing industry sales fell for the fifth month running in June, official figures showed on Friday, in fresh evidence of a slowdown in the engine room of Europe's largest economy.

LONDON, Aug 8 (Reuters) - The number of homes repossessed in Britain in the first six months of the year leapt by almost 50 percent on a year ago to the highest since 1999, a survey showed on Friday, as the housing downturn claims more victims.

ROME, Aug 8 (Reuters) - Italy's economy shrank in the second quarter of the year, data showed on Friday, a worse than expected result that sets the stage for what some analysts believe could be a quarter-on-quarter euro zone contraction.

OTTAWA, Aug 8 (Reuters) - A surprisingly large 55,000 jobs were lost in Canada in July, the biggest monthly job loss since the 1991 recession, providing more evidence of an economic slowdown.

Also

LONDON, Aug 8 (Reuters) - Oil fell $4 to below $116 on Friday in line with declines across the commodities complex as weaker demand and a stronger U.S. dollar outweighed concern [ . . . ]

 

[van_dutch]

YEAH! US economy is improving! It, however, comes as no surprise. There is always some cyclical motion in the economy but the general trend is up. It is difficult to identify exactly where one currently is on this motion.

 

[Chaos]

What goes down (as far as real exchange rates are concerned) usually eventually comes back up.

(OK--so it has a long way to go yet . . .)



http://h1.ripway.com/FrancescaR/EURUSD.jpg

PS--there was an exception:

In economic news:



Also

So, no more doom and gloom? The (economic) world as we know it is not going to come to an end?

The usual bunch of nutters are going to be SO miffed...

 

[balrog666]

The usual term is "dead cat bounce".

 

[coakes]

Umm, from those quotes it seems more like the dollar regained ground on the back of bad news from non-US economies rather than fundamentally good news out of the US. I wouldn't be too sure this marks a long term shift in market perception of the USD itself.

 

[Alex Libman]

Good news. Let's hope it continues.

 

[a_unique_person]

The US dollar isn't recovering, Europe is now becoming a concern, with some large economies that make up the Euro in trouble.

 

[Francesca R]

YEAH! US economy is improving!

Not really yet.

So, no more doom and gloom? The (economic) world as we know it is not going to come to an end?

Well it never was.

The usual term is "dead cat bounce".

It's all relative no? If you want to look good, stand next to the truly ugly. I would not be surprised to see the dollar gain a fair bit more against those currencies it was "going to hell in a handcart" against until recently. The good thing about currencies is that they cannot all go down at once

Umm, from those quotes it seems more like the dollar regained ground on the back of bad news from non-US economies rather than fundamentally good news out of the US. I wouldn't be too sure this marks a long term shift in market perception of the USD itself.

Correct, but as above. I think the US economy will be fine though.

Good news. Let's hope it continues.

As above.

Europe is now becoming a concern, with some large economies that make up the Euro in trouble.

Yes. And in the last 12 months the Euro region has had a large tightening of monetary conditions (appreciating EUR and no interest rate cuts, indeed a hike in rates). All that stuff the FOMC and the government did, and the dollar depreciating was stimulative for the US economy, so it probably heads out of trouble sooner and faster than the Euro-zone.

 

[Roswell-Perseis]

After spending six weeks in Europe (five in London and one in Nurremberg) I don't think the dollar is actually recovering. The European economies are suffering from a) some of the same poor decision making made in the States re: mortgages, home building, and credit; b) the fact that the U.S. economy is large enough to effect Europe's (and pretty much any other economy on the planet) and I don't mean that in an ethnocentric way; or c) stuff I'm not smart enough to think of, let alone write about.

 

[coakes]

Not really yet.



Correct, but as above. I think the US economy will be fine though.

Well, yes, it probably will turn out to be fine. The question is when tho' and that's not a call I'd like to be making right now, or at least not on that evidence.

 

[Darth Rotor]

If you want to look good, stand next to the truly ugly.

Not necessary for Francesca R.

I would not be surprised to see the dollar gain a fair bit more against those currencies it was "going to hell in a handcart" against until recently. The good thing about currencies is that they cannot all go down at once

Cannot, or are unlikely to?

Correct, but as above. I think the US economy will be fine though.

For discrete values of fine, yes. The core of the industrial sector has been rotting for some decades.

Yes. And in the last 12 months the Euro region has had a large tightening of monetary conditions (appreciating EUR and no interest rate cuts, indeed a hike in rates). All that stuff the FOMC and the government did, and the dollar depreciating was stimulative for the US economy, so it probably heads out of trouble sooner and faster than the Euro-zone.

Thanks for the concise analysis.

DR

 

[Francesca R]

Cannot, or are unlikely to?

Cannot. Neither can all assets do that in fact--when it looks like that's what's happening, all it really means is that there's a huge bull-market in t-bills

 

[Francesca R]

The thinking in the foreign exchanges is that it makes less sense to punish the dollar if other economies are doing so badly. The fear of a dollar rout, which has long stalked financial markets and even prompted the Federal Reserve chief, Ben Bernanke, to talk up the currency as recently as June, now seems to have evaporated.

http://www.economist.com/opinion/displaystory.cfm?story_id=11920764

 

[stilicho]

Quote:
OTTAWA, Aug 8 (Reuters) - A surprisingly large 55,000 jobs were lost in Canada in July, the biggest monthly job loss since the 1991 recession, providing more evidence of an economic slowdown.

That's mainly in Central Canada, whose manufacturing sector is dependent on the US market. West of that, the economy is flourishing. We have a good Westerner in power in Ottawa now and hordes of my co-workers are spending powerfully on holidays in Vegas, Hawaii, Florida and New York.

A weak USD is not altogether a bad thing, either, as it provides a silent competitive advantage for your exports. The USA, remember, is primarily a trading nation and mere currency concerns are not going to change that.

 

[a_unique_person]

http://www.economist.com/opinion/displaystory.cfm?story_id=11920764

Like I said, the dollar isn't recovering, everything else is getting weaker.

 

[Francesca R]

Like I said, the dollar isn't recovering, everything else is getting weaker.

It's all relative no? If you want to look good, stand next to the truly ugly. [ . . . ] The good thing about currencies is that they cannot all go down at once

. .

 

[Francesca R]

Yay, go greenback

 

[SaulOhio]

The dollar "recovering" its value is not so much of a good thing as it is deflation. That makes me nervous.

 

[Soapy Sam]

Many UK ? European banks took a hammering because they had loaned huge amounts to US institutions who lent it out again and lost the lot in the sub-prime mortgage crisis.
As others have said, if the US sneezes, Europe catches the cold- especially the UK, which has a lot mor fingers in the US economy than many people either side the pond realise.
As one who lives in the UK but is paid in dollars, I'm happy to see at least one financial feature going my way for once. It's been a tough couple of years.

 

[drkitten]

The dollar "recovering" its value is not so much of a good thing as it is deflation. That makes me nervous.

In Bizzaro world, where dollar-denominated prices are not increasing, this might even be true.

If you really think we're in deflation, how come a gallon of milk or eight feet of two-by-four costs more now than it did several months ago?