GDP Splat: How ‘Bout That Dollar?
July 31st, 2009WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
Wee!
I already wrote the main commentary to the upcoming phase of the game back here: Dollar Finally Breaking Down
77.688 is the last chance support on the USDX anywhere around these levels. The next stop is likely the 71-72 zone. They’ll almost certainly try to shoot some spit balls at it around 77.688 to try to get a rally going. Good luck with that.
Via: Market Ticker:
It appears to be that traders in the FX market … have deduced that the entire “improvement” in 2Q GDP came from government spending.
Well that’s not hard to figure out – it did.
They also appear to be making a bet that the US Government will attempt to continue this, along with The Fed monetizing the debt through its buyback programs to destruction of both the government and currency.
This is not positive for our economy. At all.
But this is the meme today – traders are piling into bonds expecting more Fed buybacks, they are shorting dollars like crazy, and Gold is of course reacting to these two facts.
This is a “collapse of government due to spending into bankruptcy” play folks, or at minimum “currency crisis around the corner.”
Right or wrong this is the trade being put on in size; the dollar selling in particular is especially pernicious and troublesome – that chart is essentially straight down since the GDP release this morning.
Research Credit: Andres
