Does anyone have any idea why the USD is so strong at the moment. This is puzzling me as I can't see the basis for it.
The only explanation I can come up with is that there has been a silent emulation of the Japanese 'carry trade' based on low interest US loans (US has low interest rates, a desire to protect export competitiveness and a sophisticated investment culture in common with Japan). quote from: http://goldnews.bullionvault.com/yen_carry_trade_101620084 Japan sits at the epicenter of "bubble-mania" in foreign exchange, because its yield starved domestic investors plowed $6 trillion of their savings into overseas assets. Japanese investors increased their exposure to foreign assets by ¥59 trillion ($566 billion) in 2007 alone, setting a record top of ¥610 trillion ($5.9 trillion) and making Japan the world's largest creditor nation for the 17th straight year. In addition, global speculators borrowed $1.2 trillion worth of low- cost Japanese Yen (Tokyo interest rates haven't got above 1.0% per year since the start of this decade), in order to buy higher yielding currencies, commodities, and stocks held abroad. "History never repeats, I tell myself before I go to sleep at night" (Split Enz) http://en.wikipedia.org/wiki/Asian_Financial_Crisis --- In [email protected], "Tomasz Janeczko" <[EMAIL PROTECTED]> wrote: > > Hello, > > Did you see this daily effective FED rate chart: > http://www.newyorkfed.org/charts/ff/ > > Usually effective rate follows closely target rate (currently at 1.5%) > > In recent days effective FED rate dropped below 1%. > > It looks to me that FED is going to be walking in footsteps of Japan central bank in '90s. > > Now EBC funds still at 3.75% ? They are going to cut fast, much faster than FED, IMHO. > If situation evolves in that direction we are going to see EURUSD = 1.0 soon > and probably Japanese Yen remaining the strongest currency for months to come. > > Any thoughts? > > Best regards, > Tomasz Janeczko > amibroker.com >
