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a couple of excerpts:
Investors bullish on the U.S. economy say the dollar will strengthen as America recovers first from the global economic recession. Those who expect the longest contraction since the early 1980s to continue say the currency should appreciate as the haven from turmoil in world markets. Foreign investors bought a net $22 billion of U.S. financial assets in February, the Treasury Department said April 15.
The dollar is “the best-looking horse in the glue factory” among major currencies, said Robert Blake, head of strategy for North America in Boston at State Street Global Markets LLC, which has $11.3 trillion in assets under custody.
[..]
Jim O’Neill, chief economist at Goldman Sachs Group Inc. in London, said a shrinking U.S. trade deficit will spur demand for the U.S. currency. He said in an April 21 interview that February’s 28 percent drop to $26 billion “means this massive commercial overhang of excessive supply of dollars coming from the trade deficit is basically being taken away.”
“What that tells you is that the funding problem has effectively been cut by a third already,” he said. “So I find myself these days difficult to be that bearish on the dollar, which is the base for me for the past 25 years. It’s really quite a big change.”
O’Neill predicts the dollar may rise as high as 110 yen in the next six months. He also reiterated his firm’s prediction that the U.S. will expand about 1 percent in the third quarter.
The Dollar Index largely followed the U.S. trade balance in the past nine years, rising to 117 in December 2001, the last time the gap was close to $26 billion, according to analysts at Citigroup Inc. in New York that use trading patterns to predict future price movements.
“Wow ... wow ... wow,” technical analysts Tom Fitzpatrick and Shyam Devani wrote in a report on April 9. “This dynamic could be extremely dollar positive.”
http://www.bloomberg.com/apps/news?p...&refer=economy
Jim Nickerson posted this chart from Barron's into another thread. I think it goes hand in hand with this article.
http://online.barrons.com/article/SB...lenews_barrons
Investors bullish on the U.S. economy say the dollar will strengthen as America recovers first from the global economic recession. Those who expect the longest contraction since the early 1980s to continue say the currency should appreciate as the haven from turmoil in world markets. Foreign investors bought a net $22 billion of U.S. financial assets in February, the Treasury Department said April 15.
The dollar is “the best-looking horse in the glue factory” among major currencies, said Robert Blake, head of strategy for North America in Boston at State Street Global Markets LLC, which has $11.3 trillion in assets under custody.
[..]
Jim O’Neill, chief economist at Goldman Sachs Group Inc. in London, said a shrinking U.S. trade deficit will spur demand for the U.S. currency. He said in an April 21 interview that February’s 28 percent drop to $26 billion “means this massive commercial overhang of excessive supply of dollars coming from the trade deficit is basically being taken away.”
“What that tells you is that the funding problem has effectively been cut by a third already,” he said. “So I find myself these days difficult to be that bearish on the dollar, which is the base for me for the past 25 years. It’s really quite a big change.”
O’Neill predicts the dollar may rise as high as 110 yen in the next six months. He also reiterated his firm’s prediction that the U.S. will expand about 1 percent in the third quarter.
The Dollar Index largely followed the U.S. trade balance in the past nine years, rising to 117 in December 2001, the last time the gap was close to $26 billion, according to analysts at Citigroup Inc. in New York that use trading patterns to predict future price movements.
“Wow ... wow ... wow,” technical analysts Tom Fitzpatrick and Shyam Devani wrote in a report on April 9. “This dynamic could be extremely dollar positive.”
http://www.bloomberg.com/apps/news?p...&refer=economy
Jim Nickerson posted this chart from Barron's into another thread. I think it goes hand in hand with this article.
http://online.barrons.com/article/SB...lenews_barrons
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