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Brian,
Actually it is known phenomenon that USD is getting strength
when economy collapses.
See "dollar is smiling in a recession"
http://www.morganstanley.com/views/gef/archive/2007/20071210-Mon.html (Dec 2007)
and
http://www.morganstanley.com/views/gef/archive/2008/20080407-Mon.html (Apr, 2008)
Best regards,
Tomasz Janeczko
amibroker.com
----- Original Message -----
From: "brian_z111" <brian_z111@xxxxxxxxx>
To: <amibroker@xxxxxxxxxxxxxxx>
Sent: Sunday, October 26, 2008 4:17 AM
Subject: [amibroker] Re: OT: Fed to cut rates below 1% soon ?
Does anyone have any idea why the USD is so strong at the moment.
I am puzzled by this as I can't see any basis for it.
The only explanation that I can come up with is that there has been a
silent emulation of the Japanese 'carry trade' based on low interest
USD loans (the US has low interest rates, a desire to protect
exports, sluggish growth and a sophisticated investment culture in
common with Japan).
quote from:
http://goldnews.bullionvault.com/yen_carry_trade_101620084
Japan sits at the epicenter of "bubble-mania" in foreign exchange,
because its yield starved domestic investors plowed $6 trillion of
their savings into overseas assets.
Japanese investors increased their exposure to foreign assets by ¥59
trillion ($566 billion) in 2007 alone, setting a record top of ¥610
trillion ($5.9 trillion) and making Japan the world's largest
creditor nation for the 17th straight year.
In addition, global speculators borrowed $1.2 trillion worth of low-
cost Japanese Yen (Tokyo interest rates haven't got above 1.0% per
year since the start of this decade), in order to buy higher yielding
currencies, commodities, and stocks held abroad.
"History never repeats, I tell myself before I go to sleep at night"
(Split Enz)
http://en.wikipedia.org/wiki/Asian_Financial_Crisis
--- In amibroker@xxxxxxxxxxxxxxx, "Tomasz Janeczko" <groups@xxx>
wrote:
>
> Hello,
>
> Did you see this daily effective FED rate chart:
> http://www.newyorkfed.org/charts/ff/
>
> Usually effective rate follows closely target rate (currently at
1.5%)
>
> In recent days effective FED rate dropped below 1%.
>
> It looks to me that FED is going to be walking in footsteps of
Japan central bank in '90s.
>
> Now EBC funds still at 3.75% ? They are going to cut fast, much
faster than FED, IMHO.
> If situation evolves in that direction we are going to see EURUSD =
1.0 soon
> and probably Japanese Yen remaining the strongest currency for
months to come.
>
> Any thoughts?
>
> Best regards,
> Tomasz Janeczko
> amibroker.com
>
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