14 - 18 Dec News

Taken frm last week post

niea wrote:Post NFP news:

I didn't watch bloomberg last Friday night so I just don't understand why NFP figure is good (smaller figures) but Dollar getting stronger that night?

By right(as my logic tell me), Dollar should be weaker because unemployment figures has improved showing sign new jobs being created...

Unemplyment figure drop frm -111k to -11k (huge different)

Can it be, the good news has been factor in the price before Friday night announcement?
As u can see GU & EU price climbing upwards since last Monday until Friday...

Or I'm missing some important points here? Some other issues, troubles brewing with the world/ US economy that I'm not aware of?

Link frm Bloomberg on yen movement:

http://www.bloomberg.com/apps/news?pid=20601087&sid=ayQbwy0dhGoQ&pos=1

economy good -> stock market rise -> bond price fall -> ppl go for risky asset that hv higher interest -> left Dollar -> Dollar weaken

* Bear in mind: Dollar always known as safe haven

But last Friday shows that relationship bet. good economy & Dollar has changed; stock market moving in same direction as Dollar...
not sure this changes only for that night or beginning of new trend

Went to the seminar during forex expo last weekend, one of the presenter confirm my believe regarding relationship between USD + stock market + gold.
And the reason why Dollar strengthen on NFP night instead of weaken as expected by me and other traders because there are speculation about US gov going to increase interest rate in coming months...
then the following week Bernanke came out with statement saying that they are not going to increase interest rate in near time to cool off the market...

Last week, Spain and Greece S&P rating downgrade causing drop in EU movement...

Still on why Dollar strengthen...
I received this frm my email subscription

U.S. Dollar Soars To A Five-Week High: What Now?
"Fundamentals" can hardly explain the dollar's recent strength

Long since thought of as "the rotting corpse" of the currency markets, the U.S. dollar reawakened to new life this week by rallying to its highest level in more than a month. For many -- namely those affiliated with the financial mainstream -- the dollar's revival came as a huge surprise.

Reason being: The two main fundamentals that supposedly drove the dollar to its 2009 "deathbed" were still very much in force. To wit:

The Interest Rate Factor: According to the usual pundits, the persistent, easy money policies of the Federal Reserve have held the dollar's head below water. Those being: Ten rate cuts in 12 months to a historic low of 0%. Here, a recent Wall Street Journal writes:

"Ultra-low rates have weighed on the dollar as investors use cheap dollars to fund bets in riskier assets, such as the euro and other high-yielding currencies... For [a sustained change in the dollar's trend], the Fed would have to be moving clearly toward an exit of its extraordinary easing measures."

Flash to December 7: That day, the Federal Open Market Committee released a very "dovish" periodic statement in which chairman Ben Bernanke reaffirmed his commitment to an "extended period of low rates." YET -- the U.S. dollar has continued to soar.

Next, the Economic Factor: Here, I'll let the following news item do the talking: "For most of 2009, the paradigm in the currency markets has been that good economic data was bad for the dollar as investors shun the low-yielding greenback... on hopes of a faster recovery." (Wall Street Journal)

YET -- in the wake of a recent, better-than-expected Jobs report, the dollar experienced its strongest single-day rise in a year.

Here are the facts, as they objectively stand: The most recent uptrend in the U.S. dollar got started on November 26, with a powerful burst to five-week highs on December 4. Whatever has been going on in the fundamental backdrop, the dollar's rise has been uninterrupted.

And, few saw that coming with more clarity and consistency than EWI's Short Term Update. Here, the following excerpts from recent issues tell the story:

November 25 Short Term Update: "The US Dollar Index is making a 'final probe' to complete the wave structures. When viewed in the context of the daily chart, the decline from the November 3 high still looks best as a fifth wave, which is an ending wave. A rise above __ level will be the initial signal that a low is in place."

December 4 STU: "A Bottom in the US Dollar Index. The initial leg of this turn up should be sharp, as overleveraged dollar bears are forced to cover their position."

Good news for mid day: Abu Dhabi pledges $10 Billion to Dubai allowing Nakheel to pay off bonds

During seminar, the presenter also mentioned why Dubai debt problem became world wide concern: because Dubai considered as new fast rapid developing country, lots of money been pouring in Dubai for development projects... then suddenly Dubai announced they cannot settled their debts on time, investor worried about progress of development projects...

abu dhabi help = dubai is going down?

I thought Abu Dhabi help Dubai to pay debts, so it's a positive news since Dubai can reduce/make their debt payment