In This Issue Dollar continues to fall Ger

first_imgIn This Issue. * Dollar continues to fall * German and French leaders join to push for Greek solution * Australia and Japan to join the new Asian bank backed by China * Gold stays on track for weekly gain And Now. Today’s A Pfennig For Your Thoughts. Dollar continues to move lower… I’ll let Frank start us off as he has throughout this week, so here’s Frank:  San Carlos de Bariloche – I have always been a sucker for the mountains.  No real idea why.  Is it a genetic trait or family meme?  Is it the beauty somehow connecting with another part of the brain.  Don’t know but I do like them.  Up here in Argentina’s “Little Switzerland” it’s pretty remarkable.  Vistas of epic proportion.  Glacier fed lakes show mystical blue.  Odd trees to my eyes and the howling wind off the Andes in the afternoon.  I had time for a pretty decent hike with excellent views and now the evening is setting in. Friday morning I’ll meet with a group traveling through directed by Barb Perriello of Opportunity Travel.  I wrote about this trip in a January Pfennig and now here they are arriving tonight.  I suspect we’ll chat about the wild swings in the markets . . . if only the markets had patience . . . still. It seems to me that a one word change in a Fed statement creating all that trouble this week is an indicator of it’s own.  Are we all so outlandishly ill informed about the status of the economy that 10,000 economists worldwide need a periodic statement from a government official to generate a thought?  We do note that the character of the Tech Bubble, the Real Estate Bubble, and the Credit Disaster were never included in any forward looking statement by the then currently sitting predecessors of Ms. Yellen.  In fact in all three cases her colleagues forecast clear sailing ahead.  When the current language borders on hesitant from an institution with a track record of calling crashes wrong how does that make you feel? Thanks Frank.  He is really great at weaving a story which ends up depositing us back to the day’s markets, don’t you think?   As Frank suggests, investors across the globe continue to focus on this week’s FOMC statement and in spite of the drop of the word patience most of the markets are interpreting Yellen’s statement as being dovish.  This was a classic case of ‘buy the rumor and sell the fact’ when it comes to the currency markets as most currency traders had piled on US$ longs in anticipation of the dropping of ‘patience’ from the statement but then Yellen threw them all a curve ball with her dovish words and these investors immediately reversed these long dollar positions.  While the moves weren’t quite as dramatic as the previous day, Thursday continued to see the dollar move lower across most of the currency markets.  Mike sent me a note this morning summarizing some of the data we got yesterday morning, so I’ll share his thoughts with you now:  The action in the currency market was hot yesterday, but it wasn’t because of the economic reports. As I mentioned yesterday, it was going to be fairly uneventful in the data world once we saw the conclusion of the Fed meeting on Wednesday. With that said, Thursday brought us the usual weekly jobs numbers, which showed little change by rising a bit to 291k from the previous reading of 290k. We also saw continuing claims edge slightly lower and, in the end, the labor market continues to show resolve. The Philly Fed index came in lower than expected and fell in line with the lower New York area manufacturing gauge, both of which suggest the stronger dollar environment is impacting this sector. Leading indicators increased for a second month but weakness in the industrial sector and lower business investment are areas of concern. We have nothing out today so commentary from Fed members will look to guide the market as we head into the weekend. Looking ahead to next week, its shaping up to be a tame data week as February CPI, housing, and durable goods pretty much takes care of it. Today we really don’t have any US data to drive the markets so it looks like the dollar bears will continue to wake up from their winter nap.  The dollar index is down .88% this morning with the best performing currencies being the unusual combination of the South African rand and Polish Zloty, both of which are up over 1% vs. the US$.  The Euro, Swiss Franc and Mexican Peso round out the top 5 currencies this morning with increases of .8% vs. the dollar overnight.  But as I mentioned earlier, just about all of the currencies we follow are up vs. the dollar with the only two exceptions being the Russian ruble and Japanese yen.   Even though the dollar is continuing to pull back overall, it has actually steadied a bit vs. the Euro which spiked up to a high of 1.1062 yesterday.  In news coming out of Europe last night Greek Prime Minister Alexis Tsipras was told by EU leaders that he needs to come up with a more  concrete plan for reform before further talks about Greek debt relief will be held.  Both German Chancellor Angela Merkel and French President Francois Hollande suggested that time is running out for Greece.  The leaders of Europe’s two largest economies seem to be joining together to try and force a restart for the Greek bailout negotiations.   The new Asian Infrastructure Investment Bank – a multinational development bank backed by China received the good news yesterday that both Australia and Japan  are willing to join up.  The Australian National Security Committee approved a proposal for Australia to join the AIIB overnight, which clears the way for Australia’s Cabinet to formally approve the participation early next week.  Japan has already indicated a willingness to join the bank which will be another alternative to the World Bank in lending to Asian countries looking to borrow for infrastructure projects.  Just another indication of China flexing their financial muscles which they have been building over the past several years. The precious metals held on to their gains and look on track to book their biggest weekly jump since January.  Gold prices hit a four month low earlier this week but had a strong rally following the FOMC announcement and is holding near two week highs.  The Chinese buying in the physical markets is one of the items supporting prices at these levels according to a news report I read on Reuters this morning.  The FOMC meeting also got the ‘paper traders’ back into the markets as the largest gold ETF SPDR Gold Shares saw its first inflows since the end of February on the heels of the Fed meeting.  Currencies today 3/20/15. American Style: A$ .7681, kiwi .7454, C$ .7862, euro 1.0723, sterling 1.48, Swiss $ 1.0166.  European Style: rand 12.212, krone 8.1079, SEK 8.6701, forint 283.32, zloty 3.8520, koruna 25.608, RUB 60.545, yen 120.94, sing 1.3874, HKD 7.7594, INR 62.395, China 6.1496, pesos 15.202, BRL 3.3038, Dollar Index 98.659, Oil $43.89, 10-year 1.95%, Silver $16.14, Platinum $1,123.95, Palladium $768.50, and Gold. $1,171.46 That does it for the week, hope everyone has a great day and a wonderful weekend!  I know I will. Chris Gaffney, CFA President EverBank World Marketslast_img

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