Jawboning the Dollar Higher
Jun 5th, 2008 | By Chuck Butler | Category: US Dollar & Forex TradingThis is a 180-degree change for Bollard and the RBNZ, and the news hit a nerve. I have to say that I’m surprised, given the fact that inflation in New Zealand is above the ceiling target by quite a bit. Inflation is running over 4% and is expected to peak at 4.7% in the third quarter of this year. What I think Bollard is counting on here is lower oil prices… But I think he’s barking up the wrong tree here, folks. Oil prices might be weaker right now, but how many times have wee seen oil prices back off in the past couple of years, only to come back stronger and reach higher levels before backing off again? Quite a few, is the answer… And I suspect, that’s what we’ll see this time too!
So… Not even the high yielders are shielded from this dollar rally, which has just brought euros to a level below 1.54… Aussie dollars (AUD) have held 95-cents, but barely…
The Canadian dollar/loonie (CAD), which I talked about, being so tied to oil prices, has fallen to 98-cents after spending much of the past couple of weeks at parity with the green/peachback.
OK… Before I head to the Big Finish, I have to tell you that my friend, Bill Bonner, had a great piece here in The Daily Reckoning yesterday… He imagined getting a phone call from Big Ben, who was seeking help and answers. This totally cracked me up… I wanted to highlight the end of the call, which after all the talk, the two (Bill and Big Ben) came to the conclusion that there was nothing Big Ben could do… Here’s the end of the call…
Bill to Big Ben… “Then get out while the getting is good. Maybe you could fake a heart attack or something, and announce your retirement…that would give you some public sympathy…while you leave the next guy holding the bag.”
Currencies today 6/5/08: A$ .9525, kiwi .7645, C$ .9835, euro 1.54, sterling 1.9475, Swiss .9525, ISK 77.25, rand 7.8320, krone 5.1775, SEK 6.05, forint 157.25, zloty 2.1950, koruna 15.98, yen 106.10, baht 32.98, sing 1.37, HKD 7.8080, INR 42.91, China 6.9460, pesos 10.31, BRL 1.6285, dollar index 73.76, Oil $122.50, Silver $16.68, and Gold… $872.25
That’s it for today… We’re back to a full desk today, as our “marathon man” Chris Gaffney returns, after running a sub four-hour marathon in San Diego. 2 RBI’s in an 8-6 win for my little buddy, Alex, last night… I’ve had some “bad days” the last couple of days… It’s been two weeks since my last treatment, and I still feel like I was the one that ran the marathon! (I don’t like to drive my car that far, much less ever think about running that far! HA!) I’ve been good though, heading home each day early to get my feet up and rest… It helps! The Detroit Red Wings win the Stanley Cup… That’s a bitter pill to swallow for us Blues fans… Time to hit the send button; I hope your Thursday is Thundering!
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Source: Jawboning the Dollar Higher
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Chuck Butler, is the author of The Daily Pfennig, which is republished at The Daily Reckoning. His respected analysis is frequently quoted in or referenced by: the Wall Street Journal, U.S. News and World Report, CBS Market Watch, USA Today, CNNfn, the Chicago Tribune and many other publications.
