OK… Well, the Russian Finance Minister, Kudrin, threw a cat among the pigeons yesterday, when he stated that Russia has confidence in the U.S. currency. The markets have reacted violently to this statement, sending the dollar much higher, and the currencies led by the euro, much lower. An overreaction? I think so! But… These are the types of things you watch happen, and be glad you’re not a currency “trader”! For, you would have either experienced a huge loss or gain, or… Been stopped out, and not allowed to participate in the large move… I’m not the “trading” type… I’m all about diversification… So that, when things like this happen, you realize that it’s just “noise” in the markets, and the only thing it creates for you is an opportunity to buy at cheaper levels!

It sure sounds like, looks like, and smells like, a coordinated effort by those that have the most to lose should the dollar continue on it’s downward path of the last 3 months, to get put a lid on their losses… Makes sense… But you have to wonder about what they are really thinking and doing… I’m talking about China, Russia, and Japan, who have ALL stated in the past weeks that “the dollar is fine, and there’s no substitute reserve currency”… These statements all give dollar bulls a boost, and tell them that these countries are not going to back away from dollars and dollar denominated assets.

Now… There’s a BRIC meeting coming up soon… Brazil, Russia, India and China… And while the Finance Ministers of these countries are at the meeting, I doubt seriously that they will hold the same amount of “love” for the dollar… But that sentiment will be kept to themselves, as they don’t want to send the dollar spiraling downward. These BRIC nations had it all going for them until July of last year. They were sent spiraling downward like most assets until March of this year. I would have to think that the Finance Ministers of these countries would be interested in knowing how they can avoid another downward spiral caused by dollar buying… And… This… Would be the key, folks… I don’t know what it would be, but if they did something like a currency swap / foreign exchange line between each other for trade, that would be colossal! Which is bigger than HUGE!

Well… The G-8 meeting this past weekend was centered on an “exit strategy” for the countries that have implemented the various forms of stimulus. I did see one comment on currency that came out of the meeting… German Finance Minister Steinbrück said he had “no problem with the level of the euro” Now that comment alone should have underpinned the euro coming into Monday’s trading… But again, the cat thrown among the pigeons, but Kudrin, has really taken control of the markets’ mindset today.

We will see central bank meetings from Japan, Norway, and Switzerland this week… Don’t expect much from any of them, as interest rates are near to the bone for all… Norway’s Norges Bank has an internal rate of 1.50%, which does give them some leeway for a cut, but again, I just don’t expect anything from any of these Central Banks this week…

In that old comparison thing, when you say this car is uglier than that car… The Eurozone has lost 1.22 million jobs in the first QTR of 2009. Unemployment here is near a 10-year high, and not looking as though it will stop the bleeding any time soon… However, we are all aware of the rot in the U.S. employment picture… In the same period (1st QTR 2009) the U.S. lost 1.912 million jobs… And… We all know the “games people play now, every night and every day now” at the BLS! So… Which car is uglier?

So… As we lead off the this 3rd week of June, we have not only the currencies but, commodities and stocks all in the red from the Kudrin words… (see above, in case you skipped over that, which I can’t imagine any one would do! HA!)

Speaking of commodities… Gold has hit a 3-week low. The shiny metal has had to endure 3 weeks of battering by China, Japan, and now Russia regarding the reduced need for an alternative to the dollar… I wouldn’t think too much of this move… Again, it’s “noise”, and soon the Kudrin words will be a thing of the past, and we’ll get back to the underlying fundamentals of a weak dollar trend eventually… But! It does give those that were thinking they wanted to buy Gold, but it was too expensive, the opportunity to grab some now!

As I turned the computers on this morning, the currencies have lost even more ground, so they haven’t found a stop level yet.

Today, we’ll see the color of the TIC’s data… You know, the Net Security Purchases… This data will be from the month of April…

We’ll also see National Home Builders House price index for this month. I know that quite a few economists believe that the housing markets meltdown has bottomed… But I think this data will prove otherwise.

Wednesday, Big Ben Bernanke and FDIC Chair Sheila Blair speak… You never know what will come out of the mouths of these two! So… We had better keep an eye out, and our ears to the ground, for you never know when you might get another quote from Big Ben like the helicopter speech of a few years ago! Don’t recall that one? Ahhh…

When asked how he would deal with deflation as the Head of the Fed (obviously before he was the Fed Head!) Big Ben reminded everyone that the Gov’t had this technology called a printing press… (he’s talking about printing money here ) and that he would throw dollars from a helicopter to keep deflation from happening…

Well… Minus the helicopter, he’s kept his word, eh? The Printing Press is working overtime and he sure is passing out the dollars to keep deflation from hitting us hard… (personally, I think he failed miserably, but that’s just me!)

So… I see that the President is going ahead with his plans to give the Fed sweeping regulatory powers… Not that I don’t want to see some changes… But again, I ask… The Fed? They’ve done such a masterful job of protecting the value of the dollar since they were created, eh? NOT! 94% loss in value since the Fed took over! Nice job! UGH!

Time to get this out the door, so on to the Big Finish!

Currencies today 6/15/09: A$ .8015, kiwi .6325, C$ .8840, euro 1.3855, sterling 1.6450, Swiss .9170, rand 8.0610, krone 6.4240, SEK 7.8280, forint 202, zloty 3.25, koruna 19.37, yen 98.20, sing 1.4570, HKD 7.7505, INR 48.15, China 6.8363, pesos 13.51, BRL 1.9260, dollar index 80.95, Oil 70.95, 10-year 3.76, Silver $14.33, and Gold $934

That’s it for today… Thanks to all that sent along notes regarding my continuing battle with cancer… Yes, it’s been two years… Seems like a lot longer! This coming weekend will be Father’s Day weekend… Always a good time at my house! The kids will all be here, little Delaney Grace, and others… So… I’m looking forward to that. Two years ago, I spend Father’s Day in the hospital with my kids, so this time around it should be in our beautiful back yard! OK… I’m very late! I hope you have a Marvelous Monday!

Chuck Butler

Source: Throwing A Cat Among The Pigeons!

The dollar rose against the euro on thin trade on Friday, as weak equities markets and fears of a deepening global recession led investors to seek the U.S. currency as a haven.

Worries about consumer spending helped weigh on U.S. and European shares, while the low-yielding yen gained ground.

Extreme risk aversion and repatriation flows have been supporting the U.S. currency recently.

The euro weakened against the yen and sterling on growing expectations that slowing euro zone inflation may lead the European Central Bank to cut interest rates more aggressively next week from the current benchmark rate of 3.25 percent.

Trading volumes were lower than usual as U.S. markets reopened for only half a day after Thanksgiving Holiday.

“Trading is very thin, with the dollar getting support from a drop in global equities and fear the start of this shopping season is going to be really bad,” said Greg Salvaggio, a currency trader at Tempus Consulting in Washington D.C. “Euro/dollar is going to be stuck in a narrow trading range between 1.26 and 1.30 for now.”

In mid-morning trading in New York, the euro was 1.1 percent lower at $1.2746 , while the dollar was up 0.7 percent against a basket of six currencies at 86.378.

Some traders also mentioned sizable month-end dollar buy-orders at the London (1600 GMT) currency fixing was adding support to the U.S. unit.

Political jitters may also have helped the dollar after militants killed more than 100 people in Mumbai, India’s financial center, in coordinated attacks.

“It’s another ‘negative’ looming in the markets,” said Salvaggio. “It may also be giving a bit of a lift to Treasuries and the dollar this morning.”

Looking ahead to next week, markets were bracing for interest rate decisions by several central banks next week, including the Bank of England, the ECB, the Reserve Bank of Australia and the Reserve Bank of New Zealand.

Provisional figures showed euro-zone annual inflation slowed to 2.1 percent in November from 3.2 percent in October.

“The ECB seems to be lagging behind the curve. Now that the region has officially hit a recession, it is possible that they will be more aggressive in easing rates,” said Kathy Lien, director for currency research at GFT Forex in New York.

“The only factor holding them back is inflation pressures. Although producer and consumer prices have been easing, the central bank is not entirely convinced that the upside risks to prices have alleviated,” she added.

The euro dropped 1.2 percent to 121.58 yen , while the dollar was little changed at 95.42 yen .

For the UK, economists polled by Reuters on Thursday expect the BoE will follow up November’s 150 basis point interest rate cut with at least a 50 point reduction when it meets next week.

“The Bank of England has been the most aggressive and proactive of the G-10 central banks in their attempts to ease monetary policy,” Lien said. “With the economy in a recession according to UK officials, interest rates could fall as low as 1 percent if the crisis continues well into the New Year.

By Vivianne Rodrigues
NEW YORK, Nov 28 (Reuters)