USD 06 (Nov 15 - Dec 25)

[winston]

The Federal Reserve doesn't really want the dollar to move higher

Yes, the Fed is threatening to raise interest rates, which looks like a "strong dollar" policy. But at the same time, the Fed is still busy conducting "weak dollar" policies.

Specifically, it still has not reversed its quantitative easing program.

The Fed continues to replace the maturing bonds it holds by conducting open market purchases of Treasurys and mortgage-backed securities.

That's why the Fed's total assets remain close to $4.5 trillion - five times the levels that preceded the Great Recession.

Source: The Non-Dollar Report

[winston]

If the Fed really wanted a strong dollar, it would not replace its maturing bonds with new purchases

Instead, it would let its bonds mature.

Letting the bonds mature would have the effect of removing dollars from the financial system, thereby making each remaining dollar more valuable.

Source: The Non-Dollar Report

[winston]

Debt, continued monetary easing, lack of economic growth, underemployment and political uncertainty are obstacles that are proving hard, if not impossible, to overcome

So maybe you should be taking this opportunity, when your U.S. dollar is wildly overvalued, to diversify into assets that will fare better when the dollar fares worse.

There is a pretty long list to choose from.

Foreign real estate is cheaper than ever. The pound's collapse, along with Brexit fears, has made U.K. property 20% to 25% cheaper than it was just three months ago.

The French are seeing the beginning of a property boom as foreign money pours into the French countryside... thanks to a euro that's down 30% from its highs and an economy that's not growing.

If you're a little less risk-averse, emerging markets real estate in places like Thailand and Malaysia can be had at prices well below what you'd find in the U.S.

Hard assets like gold, silver and industrial metals are on sale... as are shares of the companies that mine these metals. This asset class provides an excellent hedge against the dollar's decline.

Most foreign currencies are also on the bargain counter. And there's never been an easier time to invest in foreign currencies.

The Guggenheim CurrencyShares ETFs, for example, offer exposure to a broad range of foreign currencies. You can invest in the pound, the yen, the euro, the Swiss franc, the Australian dollar and the Canadian dollar through foreign currency ETFs.

It's time to diversify your portfolio and include some other currencies.

Emerging markets stocks are on sale. We've been harping on their value for months. They're higher today than they were a few months ago. But if you want to look out a couple of years, these markets look very appealing.

Ignore the Fed and the talk of higher rates. They may go a bit higher, but we're not talking a major rise in rates. The U.S. dollar is very highly valued right now, and if it strengthens in the short term, so much the better. But this strength is not going to last.

So it's time to take a good hard look at swapping some of your richly valued dollars for some of the world's undervalued non-dollar assets.

Source: The Non-Dollar Report

[winston]

How to Profit from the Rising Dollar Right Now

You can profit from the dollar rally by investing in dollars and selling short Euros and Yen.

The most direct way you can do this is through three ETFs.

1. You can buy ProShares DB US Dollar Bullish ETF (UUP), which closely tracks the exposures in the DXY. This ETF rises when the dollar rises.

2. You can buy the Euro by buying ProShares Short Euro ETF (EUFX). This ETF rises when the Euro falls.

3. And you can sell short the Guggenheim Currency Shares Japanese Yen Trust ETF (FXY). Your short position will rise in value as the Yen weakens.

Source: Sure Money

http://suremoneyinvestor.com/opportunit ... right-now/

[winston]

Apple tax row raises $2.1 trillion question for forex traders

By Patrick Graham

If the fallout from a huge EU tax bill handed to Apple includes a push to encourage U.S. firms to bring more profits onshore, recent history suggests the impact for the dollar can only be positive.

Roughly $300 billion brought back in 2005 under George W. Bush's Homeland Investment Act (HIA), which slashed the effective tax rate on repatriated funds from 35 percent to 5.25 percent.

"The dollar money would come back into U.S. equity markets quicker than the non-dollar cash"

Apple, said last year, its $186.9 billion in cash and cash equivalents held by foreign subsidiaries were "generally based in U.S. dollar-denominated holdings".

Source: Reuters

http://www.reuters.com/article/us-globa ... r%20Update

[winston]

vested

Goldman Asset Shorts Dollar as More Gradual Fed Tightening Seen

by Betty Idayu Ismail and Kevin Buckland

Goldman Sachs Asset Management is betting a rally that propelled the dollar to a seven-week high will fizzle.

Source: Bloomberg

http://finance.yahoo.com/news/goldman-a ... 31644.html

[winston]

Morgan Stanley: Fed, BoJ Clear Way For Dollar To Weaken Another 5%

By Shuli Ren

A dovish Federal Reserve and an essentially do-nothing Bank of Japan have paved the way for the dollar to fall for another 4-5% over the next few months, according to Morgan Stanley.

“The Fed was dovish enough and puts the emphasis on upcoming data, which we expect to disappoint, and the BoJ’s new policy framework is unlikely to change the near-term JPY trajectory (we expect USDJPY to fall below 100),” wrote currency strategist Hans Redeker.

In addition, the dollar’s technical movements are not good. “The Fed’s broad trade weighted USD index has failed to break above the July high, an important technical indicator, and we expect a further 4-5% decline from here.” The United Stated dollar index fell for 2 consecutive days to 95.37.

To be sure, Morgan Stanley believes the yen can weaken up to 107 next year, as inflationary expectations pick up, but since we are already heading towards October – there is just not enough time – the bank believes the yen will trade between 97 and 100 the rest of this year.

Morgan Stanley stays bullish on high-yield emerging markets currencies, such as Brazilian lira, Russian rupee and Indonesian rupiah. It continues to like the New Zealand dollar and the Australian dollar, because their yields are higher than U.S. dollar.

Source: Barron's Asia

http://blogs.barrons.com/asiastocks/201 ... another-5/

[winston]

Why the dollar will remain strong

BY ANDREW SHENG

The US remains the dominant military and economic power and is consequently the safe-haven currency. Whenever geo-politics become tense, as is the situation currently, the flight is always towards the dollar.

Furthermore, all signs point towards the US economy performing best amongst the advanced economies, despite overall slower growth post-crisis.

There is enough evidence that the US is already reaching full employment levels at 4.9% unemployment rate, with anecdotal evidence that companies are hiring in anticipation of growing consumer confidence.

Source: The Star

http://www.thestar.com.my/business/busi ... in-strong/

[winston]

"The dollar is getting stronger, that is going to have a negative impact energy prices, that is going to have a negative impact on corporate earnings, at least potentially," said Phil Orlando, chief equity market strategist at Federated Investors, in New York.

Source: Reuters

[behappyalways]

大棋局：警惕大美元時代
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