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turdburglar (41.25)

Can we get an update on the EURUSD, portefeuille?

Recs

3

November 16, 2010 – Comments (7)

Let's try this again....

From November 3:

Uncertainty removed, dollar rises, stocks fall

The Fed announcement should remove some uncertainty from the dollar and it should rise a bit.  The QE2 was already baked in with whisper numbers going around of anywhere from $250B to $2T.  That's uncertainty.  $75B per month is much less uncertain. 

So now the focus will be off of QE2 and the elections which pretty much went as expected.  After a while we'll go back to focusing on the PIIGS or terrorists or Chinese problems (what???!!!!  China doesn't have any problems - only here in the lazy, stupid US, right?), and that will help the dollar.  We also now know that we won't have any more "stimulus" where the Congress takes a freshly printed batch and hands it out the by truckload to their friends and supporters.  Basically the dollar took its beating and now it's probably somebody elses turn.

So what does that mean for stocks?  Well, a lot of the recent rally was on the expectation of a weaker dollar due to QE2 and I think they probably overshot.  The dollar will be more resilient than some are claiming for the reasons mentioned above, and it will be negative for stocks.

I'm not going all doom and gloom here, but I'd keep some powder dry to buy the stocks you want when they go on sale.

Comments:

#1) On November 03, 2010 at 3:08 PM, portefeuille (99.94) wrote:

dollar rises, stocks fall

or maybe not. EURUSD just made a "multi-month high".

 

Report this comment #2) On November 03, 2010 at 3:10 PM, portefeuille (99.94) wrote:

EURUSD just made a "multi-month high".

at around 1.4183 at around 2:17 pm ET.

 

 

7 Comments – Post Your Own

#1) On November 16, 2010 at 12:44 PM, portefeuille (99.78) wrote:

I was just stating a fact, hehe ...

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#2) On November 16, 2010 at 12:47 PM, portefeuille (99.78) wrote:

EURUSD.



enlarge



enlarge

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#3) On November 16, 2010 at 12:54 PM, portefeuille (99.78) wrote:

--------------------

#10) On May 09, 2010 at 9:03 PM, portefeuille (99.94) wrote:

The EURUSD exchange rate might "go down a bit more" but I do not expect too much "further decline" and I think most European indices bottomed on Friday or will do so on Monday. Just a "feeling", maybe.

...

--------------------

(from here)

It did drop to around 1.1874 in June.

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#4) On November 16, 2010 at 1:00 PM, portefeuille (99.78) wrote:

USDDEM.



enlarge

(from here)

 

Using 1.95583 DMark as a "proxy for the euro prior to its introduction" (1.95583 DEM were converted to 1 EUR when the euro was introduced) you get

1 USD = 1.372 DEM -> 1 "EUR" := 1.95583 DEM  * 1 USD / 1.372 DEM ≈ 1.4255 USD and

1 USD = 3.363 DEM -> 1 "EUR" := 1.95583 DEM  * 1 USD / 3.363 DEM ≈ 0.5816 USD.

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#5) On November 16, 2010 at 1:08 PM, portefeuille (99.78) wrote:

So the "EUR" went from a relative low at around 0.58 USD in 1985 to a relative high at around 1.43 USD in 1995, to a relative low at around 0.82 USD in 2000, to a relative high at around 1.60 USD in 2008, to a relative low at around 1.19 USD in June 2010. So nothing spectacular happened in the past few months ...

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#6) On November 16, 2010 at 1:14 PM, portefeuille (99.78) wrote:

What is somewhat interesting is that the recent realtive high of the EUR was at around 1.4282 USD, which is pretty close to the decade high of the "EUR" (DEM) made on March 31, 1995 at around 1.4255 USD. If that chart in comment #4 above is reliable, hehe ...

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#7) On November 16, 2010 at 4:13 PM, davejh23 (< 20) wrote:

"What is somewhat interesting is that the recent realtive high of the EUR was at around 1.4282 USD, which is pretty close to the decade high..."

Do you consider this significant?  Unless the dollar is on it's way out, wouldn't you be looking for eventual reversion to the mean?...dollar strength and weakness in stocks?  Is your nice S&P graph done for?

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