Hey Gang,
For all you currency traders, Ye Xie, summed up my thoughts on the dollar. I posted the comments below. I encourage you to think of how a weak dollar effects stocks. A weak dollar helps commodities, increases profits for international companies, and increases exports into the US. A close eye on these types of stocks will lead to nice profits over the summer.
Happy Trading,
Jeff
By Ye Xie
June 20 (Bloomberg) — The dollar may decline against the euro on speculation the Federal Reserve will delay increasing borrowing costs as the U.S. economy shows few signs of recovery.
The greenback has traded in a range of $1.53 to $1.56 per euro after last week’s 2.5 percent gain, the biggest since 2005. The pound rose yesterday to a two-week high versus the euro on an unexpected surge in U.K. retail sales. The Swiss franc fell as the central bank left its target lending rate at 2.75 percent, one of the lowest among industrialized countries.
“The Fed is not likely to back up its hawkish rhetoric with interest-rate hikes,” said Vassili Serebriakov, a currency strategist at Wells Fargo in New York. “That could set off a new wave of dollar selling.”
The dollar traded at $1.5504 per euro at 6 a.m. in Tokyo, after rising 0.2 percent yesterday. The U.S. currency was little changed at 108.02 yen. The euro traded at 167.43 yen, following a 0.1 percent drop.
Futures on the Chicago Board of Trade showed a 10 percent chance the Fed will increase the 2 percent target rate for overnight lending between banks by a quarter-percentage point on June 25, compared with 22 percent odds a week ago. The chance of an increase in borrowing costs in August also fell.
“It will be a huge mistake for the Fed to raise rates and jeopardize the economy,” said Steven Butler, director of foreign-exchange trading at Scotia Capital Inc. in Toronto. “We are facing the next wave of the U.S. economic downturn in the second half of the year. We are going to have another sharp downturn in the dollar.”
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