February 2010 - Daily Pfennig

A free, quick-reading daily e-letter on world currencies, economic trends, and the occasional baseball score.

Daily Pfennig

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  • Roller coaster ride for the dollar...

    In This Issue..
    * Bernanke sees rates remaining low...
    * Greece continues to weigh on the euro...
    * Yen climbs vs euro...
    * India's economy expands...

    Good day... We finally got a bit of the volatility we've been looking for yesterday, as the markets moved dramatically as the Fed Chief testified before congress. But overnight the Asians had a different opinion and moved the dollar back up. So the currency markets were pretty much like a roller coaster ride, moving dramatically up and down but ending up pretty much right back where we started. I'll begin where we left off yesterday, the Fed Chairman's testimony to the House Financial Services committee.

    As we expected, the Fed Chairman told the committee members that Fed will keep interest rates near record low levels for several more months as the 'nascent' recovery remains fragile. The dollar immediately sold off as currency traders who had bet on an early jump in US interest rates reversed their dollar long positions. But in taking a page right out of Greenspan's book, Bernanke tried his best to play to both sides of the House, saying that 'Private final demand does seem to be growing at a moderate pace....' and telling the congressmen that the Fed will need to start tightening policy 'at some point'....
  • The tight ranges continue...

    In This Issue..

    * Dollar drifts higher...
    * Bernanke to testify...
    * Commodity currencies battle back...
    * David Galland on NABE's growth predictions...

    Good day... And a welcome to a Wonderful Wednesday! Chuck is headed down to sunny Scottsdale today, so I will have the con on the Pfennig for the rest of the week. Hopefully the markets will provide me some pfodder for the pfennig, as it can be a struggle to find things to write about when the markets aren't moving much.

    That has been the case with the currency markets over the past few days, as the dollar has been trading in a fairly tight range. It felt like the dollar had the possibility to break out of this range yesterday, as we got a couple of different reports which looked to push the dollar higher...
  • A Change Of Heart?

    In This Issue..
    * Very Tight trading ranges...
    * Gold and loonies are cheaper today...
    * What are these guys thinking?
    * China not 'ideal' to buy gold?

    Good day... And a Terrific Tuesday to you! Well... Here we are this morning, the currencies have basically remained stalled, with only the 'higher yielders' making any headway, albeit small headway.

    The non-dollar currencies saw a bit of selling yesterday morning, after I signed off, but have rebounded, like I said, a bit in the overnight markets. There's a feeling among us here on the trading desk that we're about to break out here... It's either going to be a break out to the high side or the low side... But I doubt that we're going to remain in these tight ranges for too much longer. But, that's just my opinion, of course, I could be wrong!...
  • Japanese Investment Trusts To Buy A$'s?

    In This Issue..
    * Currencies recover from Discount rate hike...
    * Gold recovers too...
    * An idea for Greece...
    * Loonies fueled by Oil and Gold...

    Good day... And a Marvelous Monday to you! Happy Birthday George Washington! One of my fave past Presidents for sure! And I'm so excited about this, it can't wait until the last paragraph... How about that U.S. Men's Hockey VS Canada game last night? WOW! I had a reader ask me a couple of months ago why I didn't mention the U.S. Under 20 men's hockey Championship, which came against Canada... So there, hopefully I made up for that missing comment!

    Well... Front and Center this morning... Let's start with this... Consumer prices rose 0.2% in January, equaling the increases in December and November. Market expectations going into the report had been for a slightly larger 0.3% rise. Core prices surprisingly fell 0.1% in January following the 0.1% rise recorded in December and the flat reading in November. On a year-over-year basis, the overall CPI index rose 2.6% in December....
  • Fed Raises Discount Rate!

    In This Issue..

    * Rate hike sends currencies to the woodshed...
    * Gold recovers then sells off!
    * The tale of two Americas...
    * Weekly Jobless Claims Jump!

    Good day... And a Happy Friday to one and all! A Fantastico Friday, if... You were looking for the Fed to raise the Discount Rate yesterday afternoon! If you weren't... Like me... Well then, we're going to have to work at making this a Fantastico Friday!

    So... Front and Center this morning... I'm sure you all heard that the Fed, in a surprise move, raised their discount rate 1/4 point to .75%... This really put the currency guys in a tizzy, and they began to earnestly buy dollars the rest of the day... They went at it hard, and didn't stop until the euro was sitting around 1.3475......
  • It Was a Risk Off Day!

    In This Issue..

    * Risk aversion sets in again...
    * IMF sends Gold to the woodshed...
    * Ron Paul chimes in...
    * U.S. data all prints good...

    Good day... And a Tub Thumpin' Thursday to you! How are you today? You know, I was thinking about that yesterday... I tend to tell you quite a bit how I'm doing, but I fail to ask you how you're doing... Heard one of my all-time fave songs on the way to work today, which put a smile on my face, and of course led me to sing-along! Oh! The name of the song? Mellissa - by the Allman Brothers...

    Well, front and center this morning, we had the entire day and a half rally in the risk assets completely erased, wiped out, and reversed yesterday... Recall, that I told you in the morning that the euro had lost about 1/4-cent while I was writing... Well, it held to near 1.37 until about mid morning, and then the trap door was sprung, and the euro went falling through the 1.37, and 1.36 floors!...
  • Risk Returns This Week...

    In This Issue..

    * Risk assets remain well bid overnight...
    * RBA Gov. Stevens talks hawkish about rates...
    * China reduces Treasury purchases for 5th straight month...
    * Brazil outperforms its BRIC colleagues!

    Good day... And a Wonderful Wednesday to you! WOW! Thanks so much for all the kind words sent along regarding the jazz bank performance... That sure is nice to know of all the very kind people / readers out there! Of course, I already knew that 3 years ago, when it was announced that I had cancer...

    OK... Front and Center this morning, we saw quite the rally in risk assets yesterday, all day, and all night! It was like the sea parted, the stars aligned, and the karma began to flow... The global economic recoveries came back into the thoughts of traders and investors, and the fears of Greece waned... It was as if none of the 'sky if falling' theatrics had gone on the past month!...
  • German Investor Confidence Declines...

    In This Issue..

    * Risk makes a comeback... At least today!
    * ZEW / German Confidence slips 5th consecutive month...
    * Something scary at the Treasury auction...
    * Popping the ego bubble...

    Good day... And a Terrific Tuesday to you! Thanks to all who sent along their thanks for my Valentine's Day Special Pfennig... It's not what I wanted to send you, but what I had to do, to properly inform you of what's going on... You know, I've been accused by more than a few people over the years as being a cheerleader for the currencies, and doing nothing but reporting bad news for the dollar to promote the currency business here at EverBank.

    You know... If all I ever report is bad news, then maybe that's all there is! But... I've fought those things for years, and this is but one more time, that I've warned about something regarding currency values......
  • Eurozone Economy Stumbles, Fumbles...

    In This Issue..

    * Euro gets sold on weak data...
    * China tries to slowdown again...
    * A$'s get slapped on the China slowdown attempt...
    * Retail sales & confidence print today...

    Good day... And a Happy Friday to one and all! A Fabulous Friday, in hopes of becoming a Fantastico Friday! It is a 3-day weekend, and we get paid today, so there are some good steps toward Fantastico... Alex's Fox "gig" went great, he stood up, strong and tall, and ripped off a smokin' guitar solo that lasted about 1-2 minutes... But, it was a very late night for yours truly, and so I'm draggin' the line this morning...

    Front and Center this morning, the non-dollar currencies led by the euro, are sliding against the dollar... Yesterday, the currencies range traded all day, and in the overnight Asian session that pattern remained tight... But in the European session this morning, as Economic growth in the euro zone slowed in the fourth quarter of 2009, as only one of the currency area's four largest economies expanded....
  • Big Ben Talks Rate Hikes...

    In This Issue..

    * Currencies trade in a very tight range...
    * Aussie job creation soars!
    * Oil pushes loonies higher...
    * The Mogambo Guru returns!

    Good day... And a Tub Thumpin' Thursday to you! Well... It's a BIG night at the Butler house... Not really at our house, but more the Fabulous Fox! My little buddy Alex, and the jazz band he plays guitar for, will be performing tonight at the Fabulous Fox, which for those of you not familiar with the Fox, it's a beautiful refurbished theater here in St. Louis... Alex also has a big guitar solo, so this should be good!

    OK... Well, the 'experts' that thought the Trade Deficit was going to narrow in December got their lunch handed to them yesterday, when not only did the Trade Deficit NOT narrow, but widened from $35 Billion to $40 Billion! Now that stinks! And... I'll tell you right now, it will deduct from the 5.7% GDP figure that was printed a couple of weeks ago. Yes, this increase in the Trade Deficit will probably reduce the GDP figure to at least 5%...

    ...
  • Germany Weighs Possible Bail Out...

    In This Issue..

    * Some healing in the currencies...
    * Brazilian real heats up!
    * Is there a secret central bankers meeting?
    * Aussie Confidence weakens...

    Good day... And a Wonderful Wednesday to you! It sure turned out to be a Terrific Tuesday yesterday, even with 5 inches of snow on the ground! There are rumors going round that someone's underground, and she will rock you, no wait, the rumors are... 1. There is a secret central bank meeting going on, and 2. that Germany is weighing bailout possibilities for Greece...

    The latter really lit a fire under the risk assets yesterday, allowing stocks, currencies and commodities to enjoy a day in the sun, away from the shade the dollar was casting on the risk assets. Stocks turned around and had a strong showing for the day, Gold was up $15, and currencies, led by the Brazilian real gained back some precious ground VS the dollar. I know that sounded a little strange saying 'led by the Brazilian real' as I normally associate the currencies being 'led by the euro'......
  • Bias To Buy Dollars Remains In Place...

    In This Issue..

    * Some healing in the currencies...
    * What's a dead cross?
    * Norway, S. Africa and Norway rally...
    * U.S. deficit spending continues...

    Good day... And a Terrific Tuesday to you! I'm Back! Boy, was that ever a great idea that our little Christine had a couple of weeks ago, when she heard my schedule... 'you should take off that Monday'... Yes sirree Bob! That was the best idea I've heard in a month of Sundays! So... As you can see, or will see soon, I'm full of you know what and vinegar this morning... Let's get going on this Terrific Tuesday!

    Well... Front and Center this morning, the non-dollar currencies have seen some healing... Some, not much, but some... But these mini-rallies are on tenterhooks folks, they can be reversed in a New York Minute... And, now that I look back at the screens, that's exactly what's happening! UGH! These turn-arounds are beginning to give me a rash!...
  • The dollar holds on..

    In This Issue..

    * The Dollar holds on...
    * Pimco is buying Brazilian bonds...
    * Surprising data from the Economist...
    * Chuck's thoughts from Orlando...

    Good day... Chuck spent an extra day in Florida, so he stayed home to recuperate today. I made it home Saturday night, and was a bit shocked by all of the ice and snow which covered my truck at the airport. I heard so much about the winter storm which rocked the east coast that I forgot to check the weather here at home. I am a bit behind this morning, as I stayed up a bit celebrating the Saints victory with friends.

    The dollar bulls were celebrating again on Friday, as the dollar rally continued. The recent strength in the US$ will probably continue this week, as it looks like it will be fairly uneventful as far as data releases. We won't have any reports out in the US today, and tomorrow will only bring the wholesale inventory number. Wednesday we will see December's trade balance along with the monthly budget statement for January. Both of these numbers will likely reflect an ever-growing deficit here in the US, with a 50 billion dollar monthly budget deficit, and a trade deficit just below 35 billion....
  • Weekly Job Losses Continue To Pile Up!

    In This Issue..

    * Back to the 'safe haven' trades...
    * The dollar hammers the euro!
    * It's a Jobs Jamboree Friday!
    * The SNB sells francs...

    Good day... And a Happy Friday to one and all! It's a draggin' the line Friday for me, but I'll make every attempt to turn it into a Fantastico Friday for sure! The Big Stock Sell off that I've warned about since probably June of last year, looks like it has finally arrived... Bringing with it, my biggest fears, that the link between all the risk assets, had not been broken completely, and this link has turned into a bloodletting on currencies and commodities...

    OK... So I got that out of the way, front and center this morning! You know... Ever since I began writing about a Big stock sell off, I told you that, should the link remain in place, and the currencies and commodities have adverse reactions, then we would come to the fork in the road... The people that bought currencies and commodities to keep up with their neighbors, in hopes of being able to brag about their returns at the next bar-b-que, will panic and sell, making the sell off even worse... The people that bought these risk assets for the 'right reason', which was to diversify their investment portfolios, so that not all their investments were denominated in dollars, and to provide a hedge against further potential losses by the dollar, and to reduce their overall risk for their investment portfolio, will just batten down the hatches, hunker down, and ride this out... And... If any thing, look to pick up more of these risk assets at cheaper levels as we go along......
  • Global Growth Takes A Hit!

    In This Issue..

    * Back to the 'safe haven' trades...
    * The dollar hammers the euro!
    * ECB & BOE meet today...
    * Brazilian games with the real...

    Good day... And a Tub Thumpin' Thursday to you! On one hand it's tub Thumpin' because I'm here in what was sunny Florida yesterday... And on the other hand, it's not tub Thumpin' because I'm here in Florida! Yeah, writing on the road is not one of my fave things to do, but I'll struggle through it...

    Well... The news that Chris brought to you yesterday, regarding the mini-rally in the currencies, led by the euro climbing back to 1.40, was completely washed out by the time the wheels on his plane touched down here in Orlando yesterday afternoon. Chris had said as he signed off that the dollar was being bought right then, and he was right... And that buying of the dollar lasted all day!...

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