| Followers | 679 |
| Posts | 140876 |
| Boards Moderated | 36 |
| Alias Born | 03/10/2004 |
Saturday, February 06, 2016 8:32:43 AM
The U.S. Dollar Shortage
* February 5, 2016
U.S. dollar liquidity, calculated as the U.S. monetary base plus the amount of U.S. government securities held in custody for foreign accounts, is shrinking.
Curiously, this U.S. dollar liquidity measure is presently contracting faster than it did during the Asian/EM crises in 1997-’98.
Both components of this measure are weak. The U.S. monetary base is shrinking as U.S.-domiciled banks’ reserve balances at the Federal Reserve are contracting. Meanwhile, foreign holders of Treasurys are selling their U.S. bonds and notes as demand for the greenback is surging. This is likely related to EM central banks’ intervention in their exchange rate markets to defend their currencies.
Historically, this measure of U.S. dollar liquidity has been correlated with EM share prices, and somewhat less so with advanced countries’ share prices. Our EM team believes shrinking U.S. dollar liquidity will be accompanied by a rising demand for U.S. dollars, especially from developing countries. This will ensure the U.S. dollar’s value is bid up further, particularly versus EM currencies.
http://blog.bcaresearch.com/the-u-s-dollar-shortage
• George.
Click on "In reply to", for Authors past commentaries.
* February 5, 2016
U.S. dollar liquidity, calculated as the U.S. monetary base plus the amount of U.S. government securities held in custody for foreign accounts, is shrinking.
Curiously, this U.S. dollar liquidity measure is presently contracting faster than it did during the Asian/EM crises in 1997-’98.
Both components of this measure are weak. The U.S. monetary base is shrinking as U.S.-domiciled banks’ reserve balances at the Federal Reserve are contracting. Meanwhile, foreign holders of Treasurys are selling their U.S. bonds and notes as demand for the greenback is surging. This is likely related to EM central banks’ intervention in their exchange rate markets to defend their currencies.
Historically, this measure of U.S. dollar liquidity has been correlated with EM share prices, and somewhat less so with advanced countries’ share prices. Our EM team believes shrinking U.S. dollar liquidity will be accompanied by a rising demand for U.S. dollars, especially from developing countries. This will ensure the U.S. dollar’s value is bid up further, particularly versus EM currencies.
http://blog.bcaresearch.com/the-u-s-dollar-shortage
• George.
Click on "In reply to", for Authors past commentaries.
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
• gtsourdinis
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
