Wall Street Manna

An irreverent look at Wall Street

Thursday, December 18, 2008

The dollar is setting up to reverse against the Euro

All this handwringing on the dollar, now that it is approaching 1.47 on the Euro, means that the our dollar is ready to get stronger again.

It took only a couple days for the market seers to say that the Fed was just "pushing on a string" again.

I think these last moves in oil, and this last weakness in the dollar, is the unwinding of bad bets.

Remember back in May when Goldman Sachs said oil was going to $200?

We believe there is a fundamental misperception among many in the oil industry, Wall Street, the media, politicians and the general public that so-called 'speculators' are driving up the oil price to supposedly unjustified levels.

"Unfortunately, we do not think the energy crisis will be solved by finding and punishing the big, bad speculator.

"In fact, commodity investors are helping to solve the energy crisis by speeding up the process of incentivising higher capital spending on a wide range of energy projects, while at the same time encouraging lower levels of demand by energy users."

http://www.belfasttelegraph.co.uk/business/goldman-sachs-oil-will-superspike-to-36200-per-barrel-13876381.html

The speculator in oil was wrong. Why do people always think that these macro moves are not affected by big players with bad bets?

It's the same with the dollar here.

2 Comments:

At December 18, 2008 at 12:22 PM , Blogger Arcturus said...

I am a little confused, are you saying this recent dollar weakness will reverse or continue?

 
At December 18, 2008 at 1:24 PM , Blogger Palmoni said...

No the dollar will get stronger, and reverse the trend of being weaker against the euro!

As it happened!

 

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