Daily Pfennig

In This Issue..

* Non-dollar currencies rally...
* A$'s and C$'s to parity?
* Reaching 40% of expenditures...
* Gold & Oil on the rise once again...


Good day... And a Terrific Tuesday to you! A long day on the desk for me yesterday, left me draggin' the line... But I'm rested and refreshed again this morning, so let's get to the Pfennig for today! The Finance Ministers of the Eurozone met yesterday, as I told you, and they've tried to stem the euro's rise... But, they'll need more than words to get the job done! And so, we begin a new day...

Front and Center this morning, the currencies, which had given back ground overnight to the dollar, are back in rally mode, and are taking liberties with the dollar once more. For most of the night that was not the case, though. The dollar had rallied back and sent the euro, for instance, to the 1.48 handle, after the single unit spent yesterday at 1.49 and change... There seemed to be a move to the dollar, but that didn't last long, and the currencies are once again rallying VS the dollar this morning, and the euro has pushed to 1.4970 as I write......

* Paulson and Bernanke ride to the rescue... * More debt for the US taxpayer... * Emerging markets rally... * Congrats to EverBank Soccer Greats... ** Paulson and Bernanke ride to the rescue... Ahoy thar maties.. Yesterday was a very volatile day in what has become an incredibly choppy week. The currency and metals markets began the day rallying vs. the dollar as it seemed yet another huge financial firm was circling the bowl. But late in the afternoon the dollar came charging back, and gold fell back below $850 after surpassing $900, ARRGH! So what caused this quick reversal? Senator Schumer was credited with turning the markets around. He announced, mid afternoon, that the Federal Reserve and Treasury were going to create a new government institution which would purchase all of the toxic debt instruments being held by Wall Street. Wall Street obviously thought this was just a fantastic idea, and the stock market immediately rallied, taking the dollar with it. The details of the plan still aren't available, but the markets have been desperately searching for a hero to come and rescue them, so even the hint of a rescue was enough to shoot stocks back up. The proposal currently being discussed in congress involves moving troubled assets from the balance sheets of American financial companies into a new government backed institution. The SEC also instituted a ban on short selling of financial stocks, copying a similar ban which was instituted yesterday in London. Chuck had a travel day yesterday as the FXU moved from San Diego to Dallas, but he was keeping an eye on the markets and sent me this last night....

* Senate rejects auto bailout... * ECB pushes back from the rate cut table... * Goldman and Citigroup predict a dollar fall... * China to continue to appreciate... ** Bailout failure accelerates dollars decline... Good day... Not sure when all of you will be receiving this today, as it took nearly over a half hour for my computer to boot up this morning. But its all good news for currency investors, so I'll get it written and out to you as quickly as I can. The dollar slowed its decent overnight, but continued to fall vs. most of the major currencies as the US Senate rejected the $14 billion bailout for the auto industry. The big winner in the Senate rejection of the bailout plan was the Japanese yen, as Japanese car makers are predicted to grab an even bigger piece of the US auto market. The yen, which has been rallying due to global deleveraging and carry trade reversals, suddenly had another reason to rally. The yen rose to a 13 year high, trading below 90 yen per dollar, and some are now predicting a rise to 80. Finance Minister Shoichi Nakagawa boosted the yen further after telling reporters in Tokyo that Japan isn't considering intervening in the currency markets....

* Bernanke gets help opening the spigot... * Euro and Pound rally... * Yen to continue to benefit from carry reversals...* Aussie $ rallies... ** Fed floods the markets with US$... Good day...and happy Columbus day! This is an official bank holiday here in the states, so all of the banks are closed, but the stock markets are open. We will have a half day here on the desk to try and catch up with all of the work which has been piling up the past few weeks. The phones are turned off, since it is an official bank holiday, but we will be checking messages and try to get back to everyone as quickly as possible. It is a very unusual holiday, as the banks are all closed with no funds transfers possible, but the stock markets are open. Currency desks are lightly staffed, so we will have to really work to get the trades done this morning. These strange holidays usually can lead to some real market volatility, and with today will probably be another rollercoaster. In an all out effort to ease the credit freeze, the Federal Reserve recruited help from the ECB, Bank of England, and the Swiss central bank to flood the market with US$. These central banks will auction unlimited dollar funds with maturities of seven days, 28 days, and 84 days at a fixed interest rate. This move is unprecedented, as all previous dollar swaps were capped at a maximum amount while these auctions will be for unlimited funds....

* A potential CDS debacle... * Currencies rally back... * Brazilian real history... * Saber rattling or geopolitical pressure? ** Does The Bail Out Constitute A CDS Event? Good day... And a Terrific Tuesday to you! Right out of the starters blocks this morning, I have to apologize for the tardiness of the Pfennig yesterday... We were experiencing some technical difficulties... In fact, if you sent me an email, I didn't get it yesterday! Things look better this morning, so, maybe we're back on track! I know it's no one's fault when this stuff happens, but it sure doesn't make me feel good about getting up at X:XX AM (I won't say because you will think I'm crazy!) to come in and write the Pfennig, only to see it not go out until late in the day! Well... The stock market here in the U.S. sure liked the news about Fannie and Freddie! I guess, they, just like the dollar bulls, didn't get the memo that this will put billions of dollars of tax burden on taxpayers, and most likely is going to cause a major disruption in the Credit Default Swaps (CDS) that are on the books... Oh, well, we have to learn to deal with mental giants all our lives, this is just another case of that!...

* ECB to change dollar's direction?... * BOE leaves rates unchanged... * The worst is not over in US housing... * Japan's government signals expansion is over.. ** ECB to change dollar's direction?... Good day...The dollar continued its assault on the world's currencies yesterday as the dollar index moved above the 74 handle. I pulled a chart off the Bloomberg on my way out the door last night, and it showed the only major currency which was up vs. the US$ yesterday was the Swedish krona, which managed a .07% increase. This dollar rally has legs, but I still question the fundamentals behind the dollars surge. Today may be the day we see the dollar finally make a turn, as the ECB will be announcing their rate decision. It is not that I expect Trichet to raise rates, but I do expect him to sound hawkish and refocus the markets attention on Eurozone inflation and away from worries about growth. Two reports out of Germany this morning will bolster Trichet's hawkish stance. German exports rose more than economists expected in June, defying a stronger euro and pushing the trade surplus to a record. Exports increased 4.2% from may, the most since September 2006. German industrial production also increased for the first time in four months with output rising 1.7% from a year earlier. The IMF last month rose its forecast for German economic growth this year and said the global slowdown linked to the US financial crisis was less severe than it expected....

* The dollar has a mini-rally... * TIC's data... Very scary! * Sov. Wealth Funds dropping the dollar? * Inflation or deflation? ** Bunning Throws A High Hard One! Good day... And a Tub Thumpin' Thursday to you! The dollar rallied most of yesterday, but has backed off in the morning markets ahead of the Housing Starts data in the U.S. that will print later this morning. I've got some words to Big Ben from Senator Jim Bunning for you this morning, along with some more discussion on whether our bullet is inflation or deflation... All this and more, as we get to Tub Thumpin' on this Thundering Thursday! Well... As I mention above, the dollar was the belle of the ball yesterday, as the U.S. Financials recovered, thus giving those dollar / U.S. assets bulls a reason to believe... Someone like you makes it hard to.. No wait, that's Rod, not the reason these dolts bought dollar assets! The euro fell all the way to 1.58 and looked as though it would trade with at 1.57 handle, this just one day after trading above 1.60! What the heck was going on here? Ahhh, grasshopper, sit down, and listen......

* More bias to buy dollars... * Printing money... * Kiwi gets hit hard! * Rate announcements today......