Thursday, October 15, 2009
The U.S. Dollar is getting a reprieve today as the trade weighted index is up slightly from yesterday's 14-month low that probed the 75.0 level, still a few points above the mark reached 19 months ago as commodity prices were soaring toward their summer peak.
Comments reportedly made by Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp. in Japan, are not likely to aid the dollar's nascent recovery .
“The U.S. economy will deteriorate into 2011 as the effects of excess consumption and the financial bubble linger,” said Daisuke Uno at Sumitomo Mitsui, a unit of Japan’s third- biggest bank. “The dollar’s fall won’t stop until there’s a change to the global currency system.”Yikes!
The dollar last week dropped to the lowest in almost a year against the yen as record U.S. government borrowings and interest rates near zero sapped demand for the U.S. currency.
“We can no longer stop the big wave of dollar weakness,” said Uno, who correctly predicted the dollar would fall under 100 yen and the Dow Jones Industrial Average would sink below 7,000 after the bankruptcy of Lehman Brothers Holdings Inc. last year. If the U.S. currency breaks through record levels, “there will be no downside limit, and even coordinated intervention won’t work,” he said.
Helping to take the edge off of this apocalyptic view were references to Elliot Wave Theory and the pronouncement that the U.S. dollar is now in wave five of a 40-year cycle.