Given the declining trend in net foreign purchases of the past five months, we doubt whether these would be sufficient in covering the 55.8 billion trade deficit, ... In that case, markets should expect intensifying damage for the dollar.
More Quotes from Ashraf Laidi:
Markets always have a tendency to overreact when they have news.Ashraf Laidi
The speech is as expected. He opens the door basically for further interest rate hikes. It shows he totally agrees with the last FOMC statement that said short-term interest rates hikes 'may' be needed.
Ashraf Laidi
The latest change in rhetoric -- especially from the previously reluctant government officials -- increases speculation of a March policy shift.
Ashraf Laidi
The number is not good for the dollar. There is increased difficulty for the U.S. to finance its swelling trade deficit.
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After the Fed comes out with its rate hike, and when it communicates to the market that it's satisfied with where rates are for the time being, then we may go back to focusing on the deficits.
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It's good for the U.S. to see a relatively weaker dollar, but it's not a good idea for the U.S. Treasury to signal it wants a weaker dollar. The decline in the U.S. currency could be faster than they wish.
Ashraf Laidi
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