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The Dollar is Rolling Over
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Joshua Kane



Joined: 14 Jul 2008
Posts: 670
Location: Carlsbad, CA
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Jascha wrote:



up down up down up down?

Seems like it isn't as low as it used to be.




'Rolling over' occurs when a currency has made a long-term top and is now breaking below former support levels, as can be seen with the dollar at this link:

http://www.marketwatch.com/investing/index/DXY

Of course, a forecast is just that, I don't have a crystal ball or anything. This sort of chart pattern historically suggests the possibility of a rapid decline should key support fail (on the chart, click on the 1yr time interval, support can be drawn right to left from the current price). What prompted me to post was the sheer amount of articles and chatter regarding the dollar decline today. Below is a small sample. We shall see...

http://www.marketwatch.com/story/pound-pressured-by-sps-uk-outlook-cut
http://www.marketwatch.com/story/gold-rises-as-dollar-weakens-200952291500
http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=aKsf3mmmoaCg
http://www.breitbart.com/article.php?id=D98BCFJO0&show_article=1
Post Fri May 22, 2009 6:19 pm
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Mikal kHill



Joined: 29 Jun 2002
Posts: 6852
Location: http://mikalkhill.com
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It goes up up down down left right left right b a b a select start

-kHill
Post Fri May 22, 2009 6:21 pm
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Jascha



Joined: 31 Mar 2005
Posts: 3936
Location: Seoul, SK
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Joshua Kane wrote:
Jascha wrote:

Also Joshua: what about the Yen?
The Yen is dropping like a brick as well, afaik. Isn't that even a bigger problem for the USA, considering the enormogantuous amount of US treasury securities the Japanese have in their vaults?


Actually a weaker Yen boosts Japanese exports. Given that Japan is predominantly an export economy, a weaker yen should provide the Japanese government with expanded tax revenue thus helping them to continue purchasing US debt (thereby floating the dollar, as they say). By what mechanisms would a weaker yen hurt the American debt situation (other than making Japanese exports more competitive thereby exacerbating the American economic downturn)?


Wouldn't a weak Yen decrease the comparative purchasing power of Japan, thus causing them to be unable to buy as many securities?

I mean, perhaps their increased exporting could make up for that, but that seems unlikely, seeing how their economy is declining pretty badly right now?

Or am I totally messing this up in my mind? I haven't thought about stuff like this for a while...
Post Fri May 22, 2009 7:19 pm
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Dr Sagacious



Joined: 01 Mar 2009
Posts: 1843
Location: Redford
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No Fed = A Good Fed
Post Fri May 22, 2009 9:50 pm
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R. Kamidees



Joined: 15 Sep 2003
Posts: 4834
Location: where the wild things are
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Well, I don't about you guys but I'm FED up.


haha, am I right?... guys?
Post Fri May 22, 2009 9:55 pm
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Dr Sagacious



Joined: 01 Mar 2009
Posts: 1843
Location: Redford
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Haha. You win.
Post Sat May 23, 2009 12:48 am
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Majawala



Joined: 14 Oct 2005
Posts: 1806
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ha!

the whole upside to this argument is emerging markets. stuff is being researched and created that most people dont understand yet. what happens when nanotech or bioengineering take off? but were still teetering on the edge of chaos and comfort. but when wasn't it like that?
Post Sat May 23, 2009 1:04 am
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mindtoast



Joined: 02 Jan 2004
Posts: 664
Location: australia
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how long until the the dollar gets Rickrolled?
Post Sat May 23, 2009 7:45 am
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Joshua Kane



Joined: 14 Jul 2008
Posts: 670
Location: Carlsbad, CA
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Jascha wrote:
Joshua Kane wrote:
Jascha wrote:

Also Joshua: what about the Yen?
The Yen is dropping like a brick as well, afaik. Isn't that even a bigger problem for the USA, considering the enormogantuous amount of US treasury securities the Japanese have in their vaults?


Actually a weaker Yen boosts Japanese exports. Given that Japan is predominantly an export economy, a weaker yen should provide the Japanese government with expanded tax revenue thus helping them to continue purchasing US debt (thereby floating the dollar, as they say). By what mechanisms would a weaker yen hurt the American debt situation (other than making Japanese exports more competitive thereby exacerbating the American economic downturn)?


Wouldn't a weak Yen decrease the comparative purchasing power of Japan, thus causing them to be unable to buy as many securities?

I mean, perhaps their increased exporting could make up for that, but that seems unlikely, seeing how their economy is declining pretty badly right now?

Or am I totally messing this up in my mind? I haven't thought about stuff like this for a while...


As I understand it, because exports are the engine of growth in the Japanese economy, a decline in the value of yen actually gives the Japanese government more purchasing power by stoking economic growth which in turn brings in more tax revenue, which in turn allows for more purchases of US debt.

Also, a declining Yen would mask the weakness in the dollar somewhat. So it seems to me that those looking to engineer a soft landing for the dollar would welcome a weaker yen. In fact, I would say the main problem with the Yen/Dollar cross trade has been their in tandem rise spurred by the credit crisis. Typically the Dollar/Yen cross wouldn't rise rapidly and persistently in tandem; this has created various imbalances that must now be unwound adding yet another complex wrinkle to any future recovery. But I haven't devoted alot of thought to this particular wrinkle; this has been a bit off the cuff....
Post Sat May 23, 2009 9:30 am
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