BostonFXtrader
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I am not one to speak Biblically, but the book of “Genesis”, chapter 41, could be correlated to the US Dollar. Joseph predicted 7 years of feast and 7 years of famine . Around the turn of this century the US Dollar was global currency king, and 7 seven years later the USD is breaking records lows against most other currencies.
2001(lows) 2008(Highs) Change
EUR 0.8350 1.6020 76 Big Figures
GBP 1.3770 2.1115 73 Big Figures
CHF 1.8220 0.9880 84 Big Figures
AUD 0.4816 0.9850 50 Big Figures
NZD 0.3896 0.8220 43 Big Figures
CAD 1.6050 0.9199 68 Big Figures
The long term US Dollar picture is beginning to come into focus. For months, we have been waiting and watching to see how far the Dollar can go. For 7 years, the US economy has dealt with some of the worst scenarios a country could face and most of them were created by us: the US Policies and the short sightedness of the FOMC, The technology bubble, the record current account deficit, the housing bubble, the Iraq War, Credit Crunch, Oil dependency, and the current inflation. Some other major issues were not caused by the United States, but poor preparation compounded some problems like 9/11 and Hurricane Katrina. Currently, the issues on the front burner for the United States is a sinking stock market, slowing growth, rising headline inflation, tanking housing market, large deficits and bank foreclosures. So far, the US is not in a recession, but I won’t be surprised if we end up in one. However, I am becoming less and less bearish on the US Dollar against the other major currencies listed above. Here at BBFX, we have always stated that around the 2008 election, the USD should be around it’s bottom. A new President should assist in fixing the old problems while finding creative ways to extinguish the coming ones. Past Presidents like JFK and Ronald Reagan have dealt with economic recessions while entering office. I just hope the right candidate gets the job. The issue I have been struggling with is this: Will the US Dollar encounter a capitulation trade then make it’s come back? Or will it slowly appreciate against the other major currencies once it breaks out of the current range? The capitulation trade will be easy to spot. It’s complete and utter carnage. An absolute free fall with no bottom in sight while it is occurring. An example would be the British Pound against US Dollar on 8/31/92 was trading at a high price of 2.0088, and 7 short weeks later on 10/26/92 the currency dropped 45 big figures to 1.5566.(See Second Page) We do not think this will happen because the US Dollar has been falling for 7 years now and is not tied to any forex limits. I believe the US Dollar will gradually ease back to comfortable levels against the majors beginning around November ‘08 thru the beginning of the year. For now, we are sticking with the same rhetoric of using low leverage playing the range; selling at the top and buying at the bottom until proven otherwise. Following those rules should ensure speculators to make it to the other side, along with a little help from the Big Guy.
Off market currency exchange is highly speculative and should only be done with risk capital. This newsletter may contain information or opinion on investment vehicles such as Equities, Bonds, Derivatives or Pooled products that BBFX does not actively trade for its clients. Prices are unpredictable. Past performance is no assurance of future performance. This newsletter is for information purposes only. The data and analysis herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors must obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this newsletter. We try to ensure that all of the information provided in this newsletter is kept up-to-date and accurate but we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Back Bay FX Services, LLC (BBFX). The content and opinions of firm personnel herein is provided in good faith and believed to be accurate; however, there are no explicit or implicit warranties of accuracy or timeliness made by BBFX. The reader agrees not to hold BBFX liable for decisions that are based on information from this newsletter. BBFX recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from multiple independent sources.
2001(lows) 2008(Highs) Change
EUR 0.8350 1.6020 76 Big Figures
GBP 1.3770 2.1115 73 Big Figures
CHF 1.8220 0.9880 84 Big Figures
AUD 0.4816 0.9850 50 Big Figures
NZD 0.3896 0.8220 43 Big Figures
CAD 1.6050 0.9199 68 Big Figures
The long term US Dollar picture is beginning to come into focus. For months, we have been waiting and watching to see how far the Dollar can go. For 7 years, the US economy has dealt with some of the worst scenarios a country could face and most of them were created by us: the US Policies and the short sightedness of the FOMC, The technology bubble, the record current account deficit, the housing bubble, the Iraq War, Credit Crunch, Oil dependency, and the current inflation. Some other major issues were not caused by the United States, but poor preparation compounded some problems like 9/11 and Hurricane Katrina. Currently, the issues on the front burner for the United States is a sinking stock market, slowing growth, rising headline inflation, tanking housing market, large deficits and bank foreclosures. So far, the US is not in a recession, but I won’t be surprised if we end up in one. However, I am becoming less and less bearish on the US Dollar against the other major currencies listed above. Here at BBFX, we have always stated that around the 2008 election, the USD should be around it’s bottom. A new President should assist in fixing the old problems while finding creative ways to extinguish the coming ones. Past Presidents like JFK and Ronald Reagan have dealt with economic recessions while entering office. I just hope the right candidate gets the job. The issue I have been struggling with is this: Will the US Dollar encounter a capitulation trade then make it’s come back? Or will it slowly appreciate against the other major currencies once it breaks out of the current range? The capitulation trade will be easy to spot. It’s complete and utter carnage. An absolute free fall with no bottom in sight while it is occurring. An example would be the British Pound against US Dollar on 8/31/92 was trading at a high price of 2.0088, and 7 short weeks later on 10/26/92 the currency dropped 45 big figures to 1.5566.(See Second Page) We do not think this will happen because the US Dollar has been falling for 7 years now and is not tied to any forex limits. I believe the US Dollar will gradually ease back to comfortable levels against the majors beginning around November ‘08 thru the beginning of the year. For now, we are sticking with the same rhetoric of using low leverage playing the range; selling at the top and buying at the bottom until proven otherwise. Following those rules should ensure speculators to make it to the other side, along with a little help from the Big Guy.
Off market currency exchange is highly speculative and should only be done with risk capital. This newsletter may contain information or opinion on investment vehicles such as Equities, Bonds, Derivatives or Pooled products that BBFX does not actively trade for its clients. Prices are unpredictable. Past performance is no assurance of future performance. This newsletter is for information purposes only. The data and analysis herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors must obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this newsletter. We try to ensure that all of the information provided in this newsletter is kept up-to-date and accurate but we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Back Bay FX Services, LLC (BBFX). The content and opinions of firm personnel herein is provided in good faith and believed to be accurate; however, there are no explicit or implicit warranties of accuracy or timeliness made by BBFX. The reader agrees not to hold BBFX liable for decisions that are based on information from this newsletter. BBFX recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from multiple independent sources.
