Dollar set to fall if Fed maintains status quo next week

[UpInArms]

http://www.forbes.com/markets/newswire/2003/12/05/rtr1171319.html

CHICAGO, Dec 5 (Reuters) - The dollar stands to tumble next Tuesday if the Federal Reserve keeps the Federal Funds target rate at 1 percent and retains its view that rates can stay low for "a considerable period."

A Reuters poll of 21 primary dealers on Friday showed that none of the dealers thought the Fed would change rates at the Dec. 9 meeting of the Federal Open Market Committee, the central bank's policy- making arm.

Most analysts, in fact, say rates likely will remain unchanged until the middle of 2004, and a few think the Fed will be on hold through next year.

<snip>

"Maintenance of the status quo, I think, will be dollar negative, because it's going to highlight the fact interest rate cycles are rising in other parts of the world," he said, referring to relatively low U.S. interest rates compared with other parts of the world such as the euro zone.

...more...

remember that the US required 2.3 billion per day in foreign investment to offset the servicing of our debts

today's dollar is now rating

Last trade 89.13 Change -0.47 (-0.52%)

[mumon]

1. THIS is the most under-reported story at the moment -

Although the Iraq calamity, and who knows what else is out there are important too...

This is gonna cause inflation in the US, or a debt crisis, and kill any so-called "recovery."

[Code_Name_D]

9. The fall of America will not be telivised.

It will NOT be telivised.
It will NOT be telivised.
It will NOT be telivised.
It will NOT be telivised.
It will NOT be telivised.
It will NOT be telivised.
It will NOT be telivised.
It will be ignores to the best of the presses ability to do so.



























We now return you to our news about the new Full Jobs economey.

[BeHereNow]

2. Holy shite...

Thanks for this...time to call the broker!

[mumon]

3. BTW, this is ANOTHER cheap labor ploy from the Repugs...

As was the "steel tarriffs" removal.

The Repugs want to drive down the dollar to dust.

[AP]

11. Exactly. It will mean that we'll have lots of low-pay crappy mnfg jobs

that will boost profits for big businesses.

Then all we'll hear next year is "employment, exports and corporate profits are up" even though the truth is that Americans will be getting poorer and poorer.

[Maeve]

4. The euros I brought back for the kids this summer

Are beginning to look like a wise investment! :eyes:

[54anickel]

5. A bit more pressure on the Fed? What about all those who flocked

to the T-bills today, betting the Fed would hold?
I thought I read somewhere that the Fed felt the dollar could withstand a drop to something like 80 (point of resistance)? I may have misunderstood something there. Easy to do in these wild and crazy days. :crazy:

[grilled onions]

6. your piggy bank earns more

It's time to select a nice sized tree to bury your money by. Banks literally charge to hold your money now and lack of interest doesn't earn granny enough for can of coffee.

[BeHereNow]

7. Trade your money for metal!

And bury that by the tree.
We are looking at Argentina here folks.
Get your money out of this currency NOW!
BHN

[54anickel]

8. End of the game?

An article that was posted earlier by the good folks in the Stock Market Watch Thread.

http://www.financialsense.com/Market/archive/2003/1118.html

The housing market is driven by low interest rates. What happens to this sector if interest rates suddenly jump as they did back in June of this year? If interest rates rise and choke off the housing market before the labor markets improve, then the economy runs into trouble. The housing market has become far too important to the health of the U.S. recovery. This is because of the role that housing plays as an important source of credit to the economy. Real estate loans now account for over 50% of all bank loans and represent over 70% of household debt. The mortgage backed security markets are now bigger than the Treasury market. If anything goes wrong in housing, it could send tremors throughout the whole financial system, i.e. the banking system.

What keeps the housing markets propped up is the bond market. What keeps the bond markets propped up? It is a game of confidence. The Fed is playing a high wire act of trying to talk down and manipulate interest rates. Its old nemesis is the bond market. In the past, bond investors have acted as vigilantes of Fed policy. In the 1990s the Fed tamed the bond markets through disinformation and pacification. The Fed must convince bond investors that there is no need for interest rates to head higher. So far the Fed has managed to convince the bond market that it intends to keep rates low for the foreseeable future, but for how long? It will not be an easy job with budget and trade deficits growing at an accelerating rate. Furthermore, there are signs that symptoms of inflation are starting to surface everywhere from rising commodity prices to a jump in gold prices. Precious metals--gold and silver--are the ultimate arbiter of Fed policy. If gold prices continue to rise and move beyond $400 and $500 an ounce, it will become a signal that the Fed is losing its grip over the financial markets and ultimately the confidence game.
----------------------------------------------------------------
More in the article regarding metals

[cliss]

10. Wow. (I only reserve that for shocking threads)

Fasten your seat belts everyone, it's going to be a crazy roller coaster ride next week!!

Let's look at the implications: the dollar tumbles in foreign currency markets. All other currencies rise. Foreign investment pulls out of the US stock market and other government investments.

In terms of purchasing from other countries, everything will become more expensive. A bottle of French wine will cost $20 instead of $15. Travel overseas is going to become very expensive, and people will hesitate to travel or purchase anything from other countries. Exporters will do well but importers will be hurt.

Interest rates are expected to rise. This means that anyone with an ARM (adjustable rate mortgage) will see their monthly mortgage go up. Inflation should start to inch up.

This COULD put a stop to Bushco's ambitious plans of world domination. They may be forced to focus on domestic issues (which are not as exciting as conquering other countries).

Any thoughts?

[Dirty Hippie]

12. Compare this thread with this one

that I posted in Economic Issues.

...
Sludge has spotted a large gorilla in the room that is not getting sufficient attention. When looking at the US economy there is one aspect of the picture that is definitely very very odd.

Since September US aggregate Money Supply has been in decline. Sharp decline.
...



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