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XMFSinchiruna (26.59)

Can you believe how much leverage the media got today out of this tiny little move in the USD? Let's look deeper...



July 08, 2008 – Comments (8)

Whenever pundits get themselves all exceited about dollar strength when in fact it does not exist, I am shocked by the short-sightedness and complete lack of technical analysis which accompanies such declarations.  And yet, the weaker hands in gold and other commodities often are played by such media hounds... turning a miniature dolar move into major temporary losses for commodity traders.

First of all.... we all know the USD had to appear strong for the G8 summit and today's dog and pony show from Paulson, Dimon, et al.  How is a dollar bump achieved, you ask?  Unwinding portions of the remaining yen carry trade.

Here's what caused the USDX to bounce off the critical 72-line yesterday and into today:

And before you go listening to those babboons on TV calling these dollar moves significant, take a look at the chart:

Again, I am as disturbed by the fate of the USD as any American citizen... this is nothing short of a tragedy for the U.S.... but investing is about being realistic and knowing how to seperate truth from fiction.  Unfortunatey, any talk of strength on the USD at this point is pure manipulative fiction.


8 Comments – Post Your Own

#1) On July 08, 2008 at 9:04 PM, XMFSinchiruna (26.59) wrote:

Let's try that 2nd chart again:

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#2) On July 08, 2008 at 9:25 PM, DemonDoug (31.02) wrote:

lol the USD is literally falling off the chart!

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#3) On July 09, 2008 at 3:14 AM, AnomaLee (28.75) wrote:

Today's Rally Led by Heavily Shorted Stocks - Bespoke Investment

Today was a typical bear market session...

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#4) On July 09, 2008 at 10:12 AM, Jro81 (< 20) wrote:

Should I believe what the chart is telling me or some politican is saying ... I'll let the media tell me what is happening ... I'll sell all my gold because the USD is going back to 100 ...


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#5) On July 09, 2008 at 10:20 AM, Deliman8 (< 20) wrote:

Whats a Yen Carry trade?

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#6) On July 09, 2008 at 10:55 AM, XMFSinchiruna (26.59) wrote:


I linked to the Wikipedia explanation in the post above  :)  In short... it's a strategy by which investors with very high risk tolerances use currency transactions as a basis to expand the capital they have to invest.

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#7) On July 09, 2008 at 1:34 PM, Nainara (< 20) wrote:

Hi Sinchiruna
Excuse my ignorance, but what does the vertical axis on the bigger chart represent?

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#8) On July 09, 2008 at 1:54 PM, XMFSinchiruna (26.59) wrote:


A measure of the value of the U.S. dollar relative to majority of its most significant trading partners. This index is similar to other trade-weighted indexes, which also use the exchange rates from the same major currencies.

Investopedia Says:
Currently, this index is calculated by factoring in the exchange rates of six major world currencies: the euro, Japanese yen, Canadian dollar, British pound, Swedish krona and Swiss franc. This index started in 1973 with a base of 100 and is relative to this base. This means that a value of 120 would suggest that the U.S. dollar experienced a 20% increase in value over the time period.

It is possible to incorporate futures or options strategies on the USDX. These financial products currently trade on the New York Board Of Trade.

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