Friday, November 19, 2004

Dollar and Sense
If it don't make dollars
It don't make sense
--DJ Quik

Greenspan summons the four horses of the financial apocalypse:
Greenspan: Appetite for Dollar Will Wane
Fri Nov 19, 2004 01:49 PM ET
By Stella Dawson
FRANKFURT (Reuters) - Investors' appetite for U.S. assets will eventually dwindle and the United States must reduce its budget deficit to prevent major economic damage, Federal Reserve Chairman Alan Greenspan said on Friday, in remarks that hit the dollar hard.
"We see only limited indications that the large U.S. current account deficit is meeting financing resistance. Yet, net claims against residents of the United States cannot continue to increase forever in international portfolios at their recent pace," Greenspan told a bankers' conference in Frankfurt.

"It seems persuasive that, given the size of the U.S. current account deficit, a diminished appetite for adding to dollar balances must occur at some point," he said.

Interesting that he would point this out. China just relinquished the control of assets that investors want to take out of the country...meaning two things:
1) an immediate relief on the pressure against the yuan, which is pegged to the dollar.
2) but a long term influx of dollars as investors are not free take their money elsewhere.
Anyways, I guess for Canadians the time to hedge against the USD is now. Get your options on.

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