Squaring the Books
"It has become quite apparent that the market was long a boatload of dollars. So, like I said last week: This dollar rally looks to have run its course…especially against the offset currencies like euros and yen."
by Chuck Butler In This Issue… - Short Dollar Positions disappear
- London gets square!
- Narrowing Deficits…
- Aussie and Kiwi going stealth…
--- Advertisement --- Need more World Market deposit slips? Simply give us a call at 800.926.4922, or, 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! Squaring The Books… Good day. I sure hope your weekend weather was as grand as ours was here in St. Louis. The weather didn't help our Redbirds, but the season is young…no worries. The dollar sold off on Friday; it was about time, too! Here's the skinny: Friday morning, just about the time London would be closing the doors and heading to the pubs, the dollar began to get sold. "Look at this rally," I said to my colleagues on the desk. I wonder what's behind this! Well, it didn't take long to figure out that London traders were "squaring their books/ positions," so they weren't short the currencies going into this week of Twin Deficits and Net Security Purchases data, that is not expected to be dollar friendly. Then as the day wore on, NY Traders did the same, but they had received additional data that pushed them to sell dollars. Recall last week, I told you how the IMM Futures contracts data (that's released weekly) had shown that short dollar position has collapsed to its lowest level since February 15th. And, you may recall that was about the time the dollar's beginning of the year rally was faltering. Well, the data last week didn't show anything to change that feeling as short dollar contracts collapsed further to its lowest level since Feb 8th, when the beginning-of year-rally failed. It has become quite apparent that the market was long a boatload of dollars. So, like I said last week: This dollar rally looks to have run its course…especially against the offset currencies like euros and yen. So, here we are. Books have been squared, and there's no data today to deal with, so I don't see any movement to speak of. But that all changes tomorrow, when the first of the Twin Deficits data is printed. So, be ready! Last week, I told you about Australia's deficit narrowing, and the currency went on to have a nice performance throughout the week. Now, the U.K. has posted a smaller Trade Deficit in February vs. January. Good stuff! I love those narrowing deficits! Pound sterling has taken a flyer on that report and climbed back above the 1.89 figure. Oh, and for those of you keeping score at home; the U.K. Trade Deficit is about $9 billion, and heading in the right direction, as opposed to the situation we have here in the United States. Speaking of the U.S. trade deficit…a preliminary report from China says that China's exports have risen 35% from a year earlier. That's equal to about $143 billion in the first quarter alone, which will leave the trade surplus around $13.5 billion. Nice eh? Yes, I know that it is not all with the United States, but I can assure you that a large piece of it is! Aussie and kiwi continue to sneak back to previous levels. They are stealth this time, as most of the attention has been shifted to euros and yen…but you and I know they are moving in the right direction! So, on that note, I'll head to the Big Finish! Currencies today: A$ .7755, kiwi .7210, C$ .8160, euro 1.2970, sterling 1.8910, Swiss .8370, rand 6.0860, krone 6.3070, forint 189.87, zloty 3.16, koruna 23.08, yen 107.75, baht 39.60, sing 1.6510, pesos 11.12, (I'm surprised pesos haven't been hit harder with all the political fiascos going on in Mexico), and gold… $428.62 That's it for today. I got to see a fun Opener on Friday…nothing like baseball played during the day! The remainder of the weekend was spent working in the yard, which I'm sure many of you were doing too! Should be an interesting week, with the deficits data and the Net Foreign Securities Purchased data on the docket. So strap yourself in, and keep all arms and legs inside for the remainder of the ride! Have a great Monday and week! |
