Look Out Below
July 3rd 2008 08:13
Will the European Central bank (ECB) Raise interest rates today? Bloomberg writer Christian Schmollinger reports:
The USD is poised to continue its decline; with ECB action, next stop mid-sixties. Jim Willie at Financial Sense Univ.writes:
Jim Willie USD Chart
Don't be misled by newspapers blaming speculators. Investors are only reacting in a prudent manner to the USD which has fallen from 122 to 72 currently. Selling dollars and buying oil or gold and silver, or Euros are ways to protect your assets. Even shopkeepers in Mexico knew enough to buy USDs when the Peso fell a number of years ago.
Willie offers up a frightening thought:
Economists are forecasting the ECB will raise its 4 percent benchmark rate by a quarter percentage point today, weakening the dollar and spurring commodity buying as an inflation hedge. Investors are purchasing oil, which has doubled this past year, as U.S. equities slump, with the Standard & Poor's 500 Index falling yesterday to its lowest level in two years.
The US$ DX index has broken below the clearly defined bearish pause flag pattern, one found in classical technical chart textbooks.
Don't be misled by newspapers blaming speculators. Investors are only reacting in a prudent manner to the USD which has fallen from 122 to 72 currently. Selling dollars and buying oil or gold and silver, or Euros are ways to protect your assets. Even shopkeepers in Mexico knew enough to buy USDs when the Peso fell a number of years ago.
Willie offers up a frightening thought:
In 2001, reports came out that the Bank For Intl Settlements in Basel Switzerland had declared the Soviet Union a geopolitical security risk. After large loans were called for repayment, the Soviet Union collapsed. Back then, the BIS also announced that the US banking system represented a similar financial risk to the global economy. One must wonder if some profound changes are soon to come.
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