In This Issue   Spain Italy  PMIs beat expe

first_imgIn This Issue. *  Spain & Italy  PMI’s beat expectations *  UK Services push sterling to 4-year high! *  RBA leaves rates and hawkish statement unchanged. *  Silver is stuck in the mud. And Now. Today’s A Pfennig For Your Thoughts. It’s All About The Currencies Today. Good Day! . And a Tom Terrific Tuesday to you! I couldn’t believe my ears this morning when the alarm went off, for it wouldn’t register in my mind that it was time to get up, and I kept saying to myself, that’s a false alarm, go back to sleep! But. Returning to sleep mode was not in the cards, as I soon figured out, that it was not a dream, and it was time to get up! UGH! I look forward to the day, I say, “Forget it, I’m going back to sleep!” It appears that the markets have finally figured that out, and decided not to go back to sleep this morning, and therefore carry through the overnight rally in the currencies.  Of course some good data prints from the Eurozone, can be quite the help in that regard! Gold is flat today, after pushing past $1,300 on Friday, and staying there yesterday. I’ve got a few things to talk about today, and some housecleaning to do, so as the Michael Stanley Band played many years ago, “Let’s get this show on the road”. Front and Center this morning, the Eurozone peripheral countries such as Spain and Italy printed strong PMI’s (manufacturing indexes) to start the month off on a good foot. Spain’s PMI actually was an acceleration of the previous strong report. For those of you keeping score at home, Spain’s PMI for April hit a 3 year high of 56.5, and marked the 5th consecutive month that it beat not only the expectations but the U.S.’s PMI figure. Italy printed a PMI of 51.1, and beat the expectations also.  Given the strength of these two PMI’s going into the European Central Bank (ECB) meeting on Thursday, I think what I said yesterday about how there will be no drama at this ECB meeting, is becoming even more accepted in the markets. This has the euro on the rally tracks this morning, folks. The euro is just a couple of ticks away from the March high of 1.3932.  Remember, though, the last time the euro got this high, and looked like it wanted to take out 1.40, that the rug got pulled out from under the euro, by something. Quite Frankly I don’t recall what it was, as I was actually in S. Florida watching either the sea come crashing into the beach, or my beloved Cardinals. But I’m sure it was something smartless, and pushed the euro back down. You know, I’ve said this many times through the years of this weak dollar trend, and that is: the ECB and Eurozone manufacturers don’t want to see the euro this strong. (remember when it was 1.50 before the financial meltdown, and looked like it might never fall?) The Eurozone leaders would prefer to see the euro between 1.20 and 1.30. But, as I’ve also said before, I don’t think the ECB is interested in currency wars, or selling the euro to weaken it. So, jawboning the euro in the direction the ECB feels to be right, is their tool of choice. Late last year when the euro was around 1.28-1.30, I told you all that I saw the euro returning to 1.50 this year.. Of course that was all centered around the idea that I had for the U.S. Fed, and their Tapering of Quantitative Easing / bond buying/ money printing/ cheap Japanese imitation. I’m still of the belief that later this year, we’re going to be looking at a very weak economy, and the Fed will have no other choice but to add to their  “signature bond buying program” and therefor throw the remaining credibility that they have out the window. And that won’t be good for the dollar, and with the euro the offset currency to the dollar, the euro then gets pushed higher and higher, whether the ECB wants it or not! I mean, come on, you probably thought I had gone quacky, lost my marbles, and all those other nice things they say when someone has their saneness questioned, when I said that about the euro, but think about that. the euro has gained 10-cents since then, did you think that was possible back when I said that? So, the open course has been set for the euro. And it’s not uncharted waters. been there, done that, bought the T-Shirt. The Reserve Bank of Australia (RBA) met last night, and left their internal rate unchanged at 2.5%… There were no major changes to the accompanying statement, and the minor ones were at least positive, with the RBA acknowledging that there has been some improvement in indicators of the labor market. Tonight will see the March and 1st QTR Retail Sales reports from Australia, and later this week, we’ll see the latest labor report. All this good news and thoughts for things to print still this week, has the Aussie dollar (A$) on the rally tracks this morning, and has passed 93-cents once again. The New Zealand dollar / kiwi, is also on the rally tracks, but for no apparent reason other than to grab onto the A$’s coat tails and go for a ride! Kiwi has traded past 87-cents this morning, which is pretty thin air for the currency. I would say this, about the moves in A$’s and kiwi overnight, I would be careful here. Should anything hit the markets to upset the applecart, these two will get hit the hardest, because they have rallied the most!  And these days, I just can’t ever feel like it’s all seashells and balloons when there are so many things to worry about that could upset the applecart in a NY Minute! But having said all that, these moves higher are very welcomed by currency holders, and should be viewed as proof that what I’ve been saying all along is coming to fruition, in that the dollar would return to the underlying weak trend. I find all this dollar weakness interesting in that it comes at a time when the “flight to safety” deriving from the problems in Ukraine, should be enough to keep the dollar from falling like it has. But it hasn’t been. Speaking of Ukraine. Things there seem to be really getting ugly, which should be a heavy weight for the euro to shoulder.. But then maybe the markets see this Ukraine problem, like my friend Jim Powell, called it. “a passing storm”. In fact, Jim starts his latest letter with this note: “The biggest obstacles to peace and prosperity today aren’t the threats that dominate the news. Slow economic growth, high unemployment, uprisings in the Middle East, and North Africa, Russia’s annexation of Crimea and so on, are passing storms.” Should you be interested in reading Jim Powell’s Changes & Opportunities Report each month, and I must say I look forward to receiving mine each month, you can click here to check out subscribing to the letter.” alt=”last_img” />

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