Monday, January 31, 2005
Morgan Stanley Economist: Dollar Support (For Now)
The economic forum published today by MS left this reader with the impression that the dollar is safe, if only temporarily. The independent Stephen Roach feels that this is the year the Fed moves rates up significantly, and that the average investor is unprepared for it. His peer, Stephen L. Jen agrees, and points out that the Bank of Japan will be unable to follow suit due to a "soft patch" in their economy. So the US rates go up while the others do not: meaning dollar support at 100 Yen and above.
One can't help but sense these guys are hedging their bets. Mr. Roach worries about unravelling "carry trades" and Mr. Jen sees the Chinese revaluation as inevitable but not pending. If the Fed follows up on their December FOMC worries with serious rate hikes, the "rebalancing" Mr. Roach has been calling for will be a wildcard for the US dollar in 2005. Hang on to your hats.
Link
One can't help but sense these guys are hedging their bets. Mr. Roach worries about unravelling "carry trades" and Mr. Jen sees the Chinese revaluation as inevitable but not pending. If the Fed follows up on their December FOMC worries with serious rate hikes, the "rebalancing" Mr. Roach has been calling for will be a wildcard for the US dollar in 2005. Hang on to your hats.
Link
# posted by Ben Jones @ 1:58 PM 
