Russian President Dmitry Medvedev may discuss his proposal to create a new world currency when he meets counterparts from Brazil, India and China this month, Natalya Timakova, a spokeswoman for the president, told reporters by phone today. Medvedev first proposed seeking alternatives to the U.S. dollar as a reserve currency in March.
The dollar also declined on speculation “smaller” central banks started today’s selling of the greenback, said Sebastien Galy, a currency strategist at BNP Paribas SA in New York.
“If people believe that there is official pressure behind it, then obviously it puts pressure on euro-dollar on the upside,” Galy said. Galy predicted the 16-nation currency may reach $1.4360 today, a peak last reached in December.
There will be demand for the record amount of debt the U.S. is selling, Treasury Secretary Timothy Geithner said in an interview earlier today with state media outlets in China.
China’s ‘Understanding’
China has a “very sophisticated understanding” of why the U.S. is running up budget deficits, Geithner said in Beijing, pledging to rein in borrowing later.
“Despite the more comforting words we’ve had from the Chinese to the U.S. overnight, it does seem that the world’s reserve managers are still concerned about exposure to the dollar,” said Ian Stannard, a foreign-exchange strategist in London at BNP Paribas SA...
‘Last Stage’
The euro’s rally against the dollar may be entering its “last stage,” and investors would likely benefit from selling the 16-nation currency against the greenback, UBS AG said.
Europe’s currency is poised to weaken toward $1.30, analysts led by Mansoor Mohi-uddin, Zurich-based chief currency strategist at the world’s second-biggest foreign-exchange trader, wrote in a note to clients yesterday. The analysts reiterated forecasts for the euro to trade at $1.40 in one month’s time and weaken to $1.30 in three months.
“We remain positive on the U.S. dollar and think that the greenback is likely in its final stage of weakness,” the analysts wrote. “Equity and bond flows have the potential to surprise and could lend support to the dollar.”
To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Matthew Brown in London at mbrown42@bloomberg.net
To sum up the day, there is no question that the Fed hit the panic button as the long bond fell to the 28 year up trend line. The reason the bonds came apart testing that level was the statement by Russia, China and Brazil that they wished to switch US Treasuries for IMF SDR bonds when, and if issued in size.
The Fed, in my opinion, bought the last 30 year auction, indicating to them the need to QE at a rate beyond your wildest imagination.
At the G8 yesterday it appears there was a request to attempt to reverse the Russian statement which was attempted by the Russian Finance minister. Actions however overcome statements. Russia, China and India reduced their purchases of US paper consistently in the past months of reporting.
June is historically a month of change. It appears the equity markets may have caught on to that. Gold will seek its low in this month, and the dollar its high. I suspect neither of those are far off in time or price.
Here are the remarks made by the President of Russia and a Chinese representative prior to this weekend’s G8 get together.
It is remarkable to see the reversal from raging dollar bears to full and unquestioned confidence in the dollar. The whole world has fallen into the spin trap that has brought the financial disaster we live in now to you.
You can fool fools. You do not have to fool algorithms because they are foolish anyway.
You cannot fool us.
If every government on the face of the planet practices deception, the move will not only be out of dollars, but out of paper and into gold.
Stay the course. We will navigate for you.
This month will be a turning point in Gold and the financial sector.
What about storing metals with the seller or buying ETFs. No! No! No! That’s paper metal, and there is no way to ensure they are actually putting aside the metal and its easy for gov. to confiscate it all?
The price of gold can be volatile in the short term, gold has always maintained its value over the long term. Through the years, it has served as a hedge against inflation and the erosion of major currencies, and thus is an investment well worth considering....
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