A Real, You Know What, Contest By World Leaders

January 29, 2018

* Dollar books 7th Week of losses!
* But fights back in the overnight markets…

Good Day…. And a Marvelous Monday to you! I’ve had a setback after my infusion on Friday, and for the most part, I’ve lived like a hermit all bunkered down with the lights off, and wrapped in blankets. But, i woke up this morning, and feel much better, so here I am! I guess that because it had been a month since my last infusion, it hit me like a ton of bricks! The Righteous Brothers greet me this morning with their song: Just Once In My Life… I always love listening to the voice of Bill Medley…

The dollar finished the week last week with its 7th consecutive week with losses… But there’s been all kinds of gyrations last night, but first let’s review what happened on Friday. One day we had U.S. Treasury Sec. Mnuchin diss the dollar, then the next day, European Central Bank (ECB) President, Mario Draghi, decided to take a shot at Mnuchin (not in name, but you could tell who he was talking about), and the euro slipped a bit, but recovered on the day… Then we had U.S. President, Trump, say the markets misunderstood the Mnuchin comments, and that the U.S. does want a strong dollar… Back and forth… a real you know what contest! In the end on Friday afternoon, the euro had slipped about ¼-cent, but remained above 1.24
.
But I have to come back to the you know what contest… These are things that currency traders don’t like, because they are filled with unknowns..

And, on Friday, these currency traders seem to be on board with the Mnuchin statement, and not what Draghi or Trump had to say! But like I said above, the currencies have gone through some gyrations in the overnight markets, and the fact that this week is a week that has a plethora of data here in the U.S. and the possibility of more policy changes, had the Asian traders intrigued with the dollar.

I’m not that concerned with the what I would call profit taking in the currencies and carrying over to the metals. I think this dollar buying will be short-lived and by the end of the week, the dollar will be booking its 8th consecutive week of losses.

Why do I think that way, I hear you asking? Well, if the economic data this week is anything like the data we saw on Friday, where Durable Goods Orders beat the expectations, but Capital Goods Order, when you take out aircraft and defense spending, was negative. I don’t know how many times I’ve said this in the past, but it doesn’t matter, because I’m going to say it again, Capital expenditures are the life blood of a growing economy, and without these expenditures, the economy will just muddle along.

And the Proof is in the pudding, as 4th QTR GDP here in the U.S. fell from the preliminary print of 3.2% to 2.6%… I do believe that when the 3.2% figure printed I said hogwash, and that it would be adjusted downward…

So, I might as well tell you what’s on the economic data print docket this week… First, today, we’ll see two of my faves, Personal Income and Spending. I don’t think that either of these are going to give the dollar bugs any reason to hold their dollars. Then we meander through the week with some housing data, and then on Friday, Groundhog Day, we’ll see the BLS’s version of an employment reports in the Jobs Jamboree, and more importantly, we’ll see the color of the latest Factory Orders, which will most likely be weaker than the previous month…

So, nothing here to give the dollar any love, as I see it… And that’s why I believe we’ll see the dollar end the week with its 8th week of losses… Any questions? HA!

I read this morning, a report that talked about how with the Aussie dollar’s (A$) surge, that the bears are showing up, as they think the Reserve Bank of Australia (RBA) will do something to halt this surge… There hasn’t been any words from the RBA in recent days, and so I’m not sure why the Bears are so sure this is going to happen?

The pound sterling had really surged last week especially after their most recent GDP report showed that the U.K. economy had grown faster than expected, but then the trap door was sprung on the pound, and soon the currency was licking its wounds… No matter how strong this currency gets, I’m still not convinced that the BREXIT goings on, aren’t going to weigh heavily on the currency. Again, BREXIT is an unknown…

The price of Oil jumped late last week and trades with a $66 handle this morning. Last week we had all three anti-dollar assets trading with a flyer, but this morning things aren’t looking up for these three… The euro is down, the price of Oil has slipped, and Gold is down $5 in the early morning trading…

Speaking of Gold remember the “great Gold price reset” that I told you about months ago? Well, it never occurred the way James Rickards explained it would, but there has been more and more analysts talking about this still happening… So, if that’s the case, then these current prices whatever, they are, represent excellent buying opportunities… And if they are all full of baloney, I still believe the buying of Gold right now is a prudent thing to do… I’m just saying!

OK, we’ve talked about the direction of the dollar, the anti-dollar assets, and the economic data this week, that’s just about all I have for you today… But I do believe that the FWIW article will be quite interesting for you, so don’t hit exit just yet, stay with me here…

To recap… The dollar ended last week with its 7th consecutive week of losses, but has fought back in the overnight trading, not a strong comeback, as the euro is still above 1.24, and the A$ is trading at 81-cents… It’s big data week here in the U.S. with a Jobs Jamboree taking place on Groundhog Day, which happens to be one of my fave movies! U.S. 4th QTR GDP was revised downward from 3.2% to 2.6%… Remember all the hoopla over the 3.2% print months ago? Well, where are all those partiers now?

For What It’s Worth… This was sent to me be the good folks at GATA, and it appeared on the Reuters sight. It’s about the fines that some bullion dealers will be paying for “spoofing” and it can be found here: https://www.reuters.com/article/us-usa-cftc-enforcement-exclusive/exclus…

Or, here’s your snippet: “The U.S. derivatives regulator is set to announce it has fined European lenders UBS, HSBC, and Deutsche Bank millions of dollars each for so-called “spoofing” and manipulation in the U.S. futures market, three people with direct knowledge of the matter told Reuters.

The enforcement action by the Commodity Futures Trading Commission (CFTC) is the result of a multi-agency investigation that also involves the Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI), the people said.

The fines for UBS and Deutsche Bank will be upward of ten million, while the fine for HSBC will be slightly less than that, the people said, without providing exact figures.

Spokesmen for all three banks declined to comment.”

Chuck Again… In case you’ve forgotten what “spoofing is”…Spoofing” is an illegal type of market manipulation that works like bluffing: A trader places big orders for stocks, bonds or futures to get others to think the price is going up or down. Then, in the blink of an eye, the spoofer cancels those orders and puts in opposite orders to take advantage of those traders. Dirty rotten scoundrels and again, no one goes to jail…

Currencies today 1/29/18… American Style: A$ .8101, kiwi .7334, C$ .8102, euro 1.2420, sterling 1.4105, Swiss $1.0688, … European Style: rand 11.9592, krone 7.6943, SEK 7.8816, forint 249.08, zloty 3.3855, koruna 20.3668, RUB 56.20, yen 108.67, sing 1.3090, HKD 7.8182, INR 63.51, China 6.3184, peso 18.52, BRL 3.1514, Dollar Index 89.14, Oil $66.14, 10yr 2.72%. Silver $17.36, Platinum $1,011.90, Palladium $1,088.23, and Gold… $1,351.80

That’s it for today… I hope you had a great weekend. I’m here all alone, as my beautiful bride went home to visit her grandbabies! So, that made it easy for me to sleep most of the day yesterday, without any noise making going on… I had some grapes yesterday, that’s it! I’ve got some good news though! Since I was admitted to the hospital last March, I’ve lost over 100 lbs! WOW! Now, if I could lose 100 more, I would be back to playing shape! I’m still HUGE folks so no accolades needed… But remember last year when I was on those steroids, and I kept saying that I felt like the Michelin Man? Last year was not a good year for me in many ways, but mostly health wise… I got word about 10 days ago, that my former colleague and friend, Mike Meyer, was moving on to a new job… Good luck Mike! I hired Mike 14 years ago, and he was a young man out of college. 14 years is a long time! It was always Chuck in the office first and then Mike each day and we enjoyed that time together… Oh well, people move on… Shoot Rudy, I did it too! Blackfoot The Easybeats take us to the finish line today with their great 60’s song: Friday On My Mind… Don’t know that one? YOU TUBE it… You’ll love the song! And with that, it’s time to go! I hope you have a Marvelous Monday and Be Good To Yourself!

Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts

 

 

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