US Dollar rebound will be short-lived
Posted by Frugal on December 4th, 2007
US dollar has rebounded from high 74 to 76 now. One should no doubt take the advantage of this rebound and pick up some euros, yens, canadian, or australian currency. Given that Fed is going to cut the interest rate relentlessly in the coming year 2008, $US will be left without any real support. The previous support at 80 level is now become a resistance.
I’m planning to buy some FXC, FXA, FXE, and maybe FXY. I still haven’t gone full force on precious metals, for the fear of some manipulation dumping move right before the rate cut on Dec 11 (or maybe it is over already). I still view that CEF/GLD/SLV will be safer moves than GDX because GDX is subjected to stock market selling. In any case, I’m ready to move in a big way out of US dollar. This is probably the last good chance that one can take before regretting again.
Unfortunately, you won’t be able to see my cash moves at my networth page because I will be classifying my holdings in foreign currency as cash also. Let’s just say that if you see US dollar index going back to 78, you should definitely exchange out. I will probably making my moves starting low-77 to possibly all the way to high-79 (if it gets there). You can get the quote for US dollar index at www.stockcharts.com by typing “$USD”, or search any futures quote at google.com.
And as I have said in early fall, if you really are super-conservative, you should have opened your bank CD. It’s still not too late. And do NOT ladder your CD. You want to ladder up, NOT ladder down in the interest rate curve.
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December 4th, 2007 at 7:39 am
Why not buy something like Direxion Dollar Bear 2.5X Inv (DXDDX)? Via MSN, “The investment seeks daily investment results, before fees and expenses, of 250% of the inverse of the price performance of the U.S. Dollar index. The fund normally invests at least 80% of assets in financial instruments that, in combination, provide leveraged exposure to the U.S. Dollar index. It creates short positions. The fund may invest in foreign currency debt instruments, forward contracts on foreign currencies, currency futures contracts, options on currency futures contracts, swap agreements, options on currencies and foreign currencies directly. It is nondiversified.” Expense ratio of 1.75%
December 4th, 2007 at 11:42 pm
at this point i’m convinced it’s not based on fundamentals, but i heard currency swings last longer and go further so i’m still sitting in fxe.