The World Tires of U.S. Dollar Hegemony

November 6, 2008 by · Leave a Comment
Filed under: Opinion 

Here is a nice article that explains the dramatic rise in the U.S. Dollar and the USDX currency basket.  The yen has been quite strong in the last few weeks while the carry-trade unwinds.  At the time of this writing, the USDX was at 85.88.  This is a decline from 86.32, which was the top of this last rally.  Now that presidential elections are done and we have had a 900 point drop in the DJIA, this is not a good sign but fits my prediction of the calm until the elections.  We will see more declines and that will mount more pressure on congress to do more bailouts.  The Big 3 automakers were meeting with Nancy Pelosi to beg for $50-100 billion more in emergency loans or they will go bust.   Be safe.

Commentary:

What explains the paradox of the dollar’s sharp rise in value against other currencies (except the Japanese yen) despite disproportionate U.S. exposure to the worst financial crisis since the Great Depression?

Read more

Yen rises on bets carry trade to evaporate on economic turmoil

October 27, 2008 by · Leave a Comment
Filed under: Currency News 

As the the carry-trade(borrow yen to purchase higher yielding assets) unwinds, the Yen has been strengthing at a profound level.  According to Bloomberg, the Yen is trading at a 13-year high against the U.S. dollar.  Near the bottom of this article, it mentions the Aussie Central Bank(ACB) has been conducting open market operations to purchase the Aussie Dollar to give it support after it has dropped over 30% in past months.

Article:

The yen rose to the strongest level versus the euro since May 2002 and traded near a 13-year high against the dollar as global economic turmoil encouraged investors to sell higher-yielding assets funded in Japan.

Read more

Yen posts biggest advance in decade as carry-trade evaporates

October 11, 2008 by · Leave a Comment
Filed under: Global News 

The yen rose against the euro and posted its biggest weekly gain in a decade against the dollar as a global stock rout prompted investors to sell higher-yielding assets and pay back low-cost loans in Japan.

Read more