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[Iris]

Global Monetary Policy within the framework of the Agenda for Growth intiative will determine the Core Fundamental factors affecting Global Monetary/Economic Policy...

the G7 defines and directs Global Monetary Policy.

the Ebb and Flow of Global Exchange Rates are G7 Monetary Policy...the Real Fundamentals.

The G7 has begun preparing for their upcoming meeting...with a glimpse into current G7 Global Monetary Policy vs. excess volatilty in exchange rates.........

The Group of Seven richest countries is considering coordinated intervention on currency markets to stabilise foreign exchange rates, Italian Economy Minister Domenico Siniscalco said.

"We are talking again about intervention, not unilateral but a coordinated intervention," he told a press conference.

"The place to coordinate exchange rates is the G7, where attempts were successful to stabilise the dollar-euro exchange rate around 1.20 at the G7 (meeting) in Boca Raton," he added.

The representatives of G7 countries tried to stabilise foreign exchange markets last February by adopting a statement in Boca Raton, Florida saying "excess volatility and disorderly movements in exchange rates are undesirable for economic growth."

The talk of intervention on currency markets comes after the euro smashed through the symbolic 1.30-dollar level on Wednesday for the first time since it began trading on foreign exchange markets in January 1999.

Political and Economic Re-alignments are G7 Monetary Policy Fundamentals transacting in the FX Markets.

[Iris]

Now after Bush's second term is set, the long term strategy for next 4 years - short USD against any other ccy.

The Voices of EuroLand have begun to speak...and now Japan on the current state of the US Dollar.............

Hiroshi Watanabe, Japan's vice finance minister for international affairs, said current movement in the dollar's exchange rate is rapid and deviates from U.S. economic fundamentals.

Japan is ready to take aggressive action in the currency market if necessary, Watanabe told reporters in Tokyo.

``We will closely monitor currency moves and take aggressive action as needed,'' Watanabe said.

The U.S. economy remains ``strong'' and there are no fundamental reasons for the U.S. currency to weaken against the yen and the euro. The U.S. currency won't weaken ``one-sidedly,'' he added.

``We consider the currency market to be showing rapid movement that doesn't match U.S. economic data'' such as gross domestic product and employment, he said.

Watanabe also said expansion of the U.S. current account deficit is slowing and Japan trusts in the currency policy of the new administration of President George W. Bush. U.S. policy makers realize currency adjustments alone won't help to reduce the country's current account deficit, he added.

Central Bankers and Finance Ministers are getting out the message on the US Dollar...Extreme Sentiment/Volatilty vs. the Fundamentals...their Voice is becoming very clear on USD.

[kuepper]

I'm also bearish on the USD. We might see a few spikes, if there are any interventions by the Europeans, or just as a result of profit-taking or technicals, but I am confident that the overall trend is still downward.

I can't help but remember that Warren Buffet is hedged against the dollar - his first move into the currency market. That man doesn't make a lot of mistakes with his money... Such large deficits with inadequate growth is not sustainable forever.

[forex777]

Not neccessarily. Could be gaining strength here shortly...

[fxscalper90]

Originally posted by mishak
Now after Bush's second term is set, the long term strategy for next 4 years - short USD against any other ccy.

Opening long USD is out off the table. On every spike - sell it, close on reverse (according to your temperament or time frame or individual style), no open position for the correction period - wait for next spike, and so on.

Take care and have fun

I'll take that trade any day, Mish!

That is, I'll go long USD against the entire globe and win.

You know why?

Because 99.99% of the masses lose.

And right now the "popular" direction to trade is short USD.

They will never learn.

[psperos]

One thing to keep in mind about fundamental speculation is that facts tend to look the worst at the bottom, and the best at the top.

[zuijlen]

Originally Posted by fxscalper90

Because 99.99% of the masses lose.

99.99% of the masses don't trade Forex, they're still in stocks and mutual funds

[autofx]

The opening post of this thread, and the facts of what has unfolded, should
provide an ample example to those who like to THINK they know what is going
to happen next.

And it reinforces my reasons for staying away from forecasting and
forecastERS.

So often, people who think they're smart, aren't.

[psperos]

Originally Posted by autofx

The opening post of this thread, and the facts of what has unfolded, should
provide an ample example to those who like to THINK they know what is going
to happen next.

And it reinforces my reasons for staying away from forecasting and
forecastERS.

So often, people who think they're smart, aren't.

if you think this is a good example, take look at this!
http://www.fxstreet.com/images/graf/jyske2005.pdf . And this is from a bank!

People should listen to auto here.
the most valuable thing i have done is ditched fundamental speculation and focused more on trend trading. There's no reason to waste time trying to predict the market. Just do whatever it decides to do.

[Croesus]

Originally Posted by dwt1020

I'm curious, what are these problems and just how grave are they?

This is one of them:
http://www.brillig.com/debt_clock/

[autofx]

Make no mistake -- the fundamental case for the drop of the dollar is
compelling.

But there are many forces at work in this time of grave imbalances. Best
not to think we understand exactly how they'll move these markets, and
when.

[fxPhreak]

I was pretty bearish on USD until I started reading a bit more about the European economies, particularly Germany, France and Italy. Beautiful countries with wonderful people. Unfortunately, their economies are tanking. Badly.

Where does that leave us?

The U.S. economy, for the near future will continue to grow. Interest rates are relatively low, as is inflation and unemployment. Debt will continue to rise as there is no end in sight to the Iraqi debacle. As long as Asia is willing to finance our debt, we'll be alright. China is growing much stronger, but if they and the Japanese decide to not fund American debt any longer, their economies crash. Asia will have to tail off buying U.S. securities very slowly so as to not upset the apple cart, if that becomes their plan. The rest of China's trade partners can not make up for U.S. consumers. America's relationship is still symbiotic with Asia. Much more so than Europe.

Until we see a marked decrease in Asian financing of American debt, we can conclude USD will not fall too far and most likely will grow through the year.

[autofx]

fxPhreak,

Hey that sounds right on. You must read some of the same economists I do.

[psperos]

Auto, who do you read? All the stuff read is mainly one direction such as financialsense.com. It would be nice to keep track of some thinkers that have differnt views.

[autofx]

I read Financial Sense Online, The Daily Reckoning, The Prudent Bear,
TheStreet.com.

There's a mix of views in those, but most of the independent (not paid by
Wall Street brokerages) economists agree that our economy is a house of
cards that could tumble at any time.

Based on what I gather, with my investor hat on, I'm in mutual funds like
USPIX, BEARX, RYAIX, RYJUX, RYVNX and RRPIX. I am buying shares of the
GLD ETF, and acquiring silver in a pool account. Anyone familiar with these
instruments will conclude I'm hoping to profit from tough times in the US.
That would be correct.

I have no long-term currency positions but daytrade GBPUSD (automatically
of course).