In This Issue… - Another Moon Shot!
- Japan's Trade SURPLUS grows!
- Two shining stars…
- Taking the wind from the dollar's sails…
--- Advertisement --- Need more World Market deposit slips? Simply give us a call at 800.926.4922, or, you can e-mail worldmarkets@everbank.com. We'll be happy to send you more Bank-By-Mail envelopes by return mail. --------------------- And now…today's Pfennig! Another Moon Shot! Good day. And a Happy Valentine's Day to lovers everywhere! I especially wish a great Valentine's Day to my high school sweetheart that I married almost 29 years ago! Okay, enough of the sappy stuff! Well, I told you all last week that I could feel a difference in the way the markets were trading the dollar and that the dollar rally could very well be just about over. Well, judging from the trading action of the past three days, we could very well be on the rally train again! I told you Friday about the Moon Shot the currencies went on in Thursday's trading, and Friday held steady, with little or no profit taking, which was a very good sign. Now in the overnight trading in Asia and Europe we're seeing another Moon Shot by the currencies, and lo and behold, the news stories are beginning to hit the wires that the dollar is ready to weaken again. The euro is trading around 1.2975 this morning, and looking quite perky! And those two shining stars in the South Pacific are picking up where they left off hitting some very nice figures of .7870 and .7150 respectively. And, I say so sarcastically, where are those that said the end was here for these two currencies? I would love for the people at CBS Market Watch to do a follow up on that story they ran last week, where they quoted all these "experts" regarding commodities and the commodity currencies who said the end was here, and then turned to me and said, "on the other side of the coin there's Chuck Butler who doesn't believe commodities and the commodity currencies rally is over." The BIG News overnight is a report from Japan that showed Japan's Current Account SURPLUS unexpectedly widened in December. Recall the sell off in yen last week that took the currency close to the 106 level? Well, that's all forgotten now, and yen is back on the rally tracks in the 104 handle. The Trade SURPLUS widened 28% in December to around 1.78 trillion yen or $17 billion in dollar terms, which is what I should probably just report it in, since the SURPLUS is probably made up of mostly dollars! Another thing hitting the news wires late Friday was the weekly report on Currency Futures positions. I've mentioned this a few times in the past as a very good indicator of what's about to happen. For instance, a couple of weeks ago I told you that the dollar shorts had all but disappeared, which I viewed as good for the currencies, as all the shorts had been covered and there would be no more buying to facilitate those short trade covers. Well, on Friday, the report showed that the dollar position had turned positive. Well, on the outside that might sound good, but the last time the dollar contracts position turned positive was last May. And it just so happens that last May was the turn-around month that ended the three-month "dollar bump." Recall last year, when I said I would be watching this report for the overall "dollar shorts" from now on? Basically, the markets use this data as a "contrary indicator" So, when the dollar posted a record number short positions last year, it was an indicator that they would have to be bought back at some time. Geez, I sure hope I'm not confusing anyone with all this "contrary talk" but to put in simple terms (hopefully) I look at this development as "bad for the dollar!" I wrote the initial draft for the March Review & Focus yesterday (don't ask about the timing!) and in it I talked about how the dollar had gotten wind in its sails by technical trading in January, and then news of a budget with significant cuts. But now that the dust has settled on that budget, it has been ruled to be a pipe dream by the markets, and so, all that wind that filled the dollar's sails has shifted to euro, yen, Aussie, kiwi, etc. We get the next BIG DATA tomorrow, when the Treasury International Capital data (TIC's) is printed. This is also called the Net Foreign Security Purchases…either way, it carries a big stick. The markets right now have the net at a positive $60 billion, which would be just enough to cover the Trade Deficit, which you will recall, posted last week at $56 billion. I would think that a bad TIC tomorrow would be the last nail in the dollar's you know what! This data is sooooo important to the future of the dollar… So get ready! We'll also see Retail Sales for January, which means that I need to check the Butler Household Index (BHI), which tells me that Retail Sales are in trouble, as there weren't many shopping bags coming into my house last month. A bad Retail Sales report could be even more trouble for the dollar, but more than that it really puts the question mark all over the economy once again! Then on Wednesday, we get Big Al Greenspan and his testimony to Congress, which used to be called the Humphrey - Hawkins. Big Al really threw a cat among the pigeons two weeks ago with his attempt to walk on eggshells, which resulted in massive dollar buying. I've already thrown water all over the markets' reaction to his speech. But the thing I want to hear from him is the truth, and no beating around the bush! Currencies today: A$ .7875, kiwi .7155, C$ .8135, euro 1.2975, sterling 1.8875, Swiss .8350, rand 6.067, krone 6.495, forint 188.45, zloty 3.095, koruna 23.20, yen 104.80, baht 38.38, sing 1.649, pesos 11.14, and gold… $422.60 That's it for today. Doesn't Valentine's Day bring back memories of those grade school Valentine's parties, where you exchanged Valentine cards, and you saved the sappiest sounding one for that special person that didn't know you had a crush on them? No? Oh, well, that never happened to me either, I was just making that all up…yeah, that's it, that's the ticket, I made it all up! Anyway, have a great Monday and Valentine's Day! |
