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Name: Peter Rosenstreich
Position: Chief Market Analyst
Company: AC Markets
Date: 18/11/08
Time: 10:53 CET
Channel: CNBC Europe
Duration: 4 mins 42 secs
Interview with Peter Rosenstreich
Louisa Bojesen
Hello everyone. Welcome back. You are still watching Worldwide Exchange here on CNBC.
It’s almost 5 to the top of the hour. Let’s just focus in on the currency markets for a minute.
This is how we’re trading on our main crossridge. You’ve got the Euro/dollar off by
approximately 0.5%. Sterling also just turning its nose a bit lower: 1.4961, still a significant
move from the 1.47 level that we were at here within the past, what, day and a half or so.
Peter Rosenstreich, Chief Market Analyst at ACM – Advanced Currency Markets, joins us.
Peter, I’m curious whether or not we are going to see dollar buying in and of that you could
anticipate, you could argue, that there’s going to be more treasury buying and in and of that
people are so risk averse that that would support the dollar.
Peter Rosenstreich
Correct. That’s the trend we have been seeing for a while. I have to point out that recently,
we’ve seen the correlation between risky assets, S&Ps, commodities, emerging markets, and
the dollar trade coming off slightly. While we’re seeing the equity markets specifically
continue to decline, the transfer has not gone directly to the dollar strength. That correlation
has been coming off a little bit, so we can’t make that perfect correlation like we have for quite
a while now.
Louisa Bojesen
How much do you think that the gains in the dollar are limited by corporate concerns? I’m
thinking about the 52,000 jobs announced by Citigroup yesterday, really taking the market by
surprise. I’m thinking about the trouble surrounding the big three automakers in the US.
These would be big corporate stories if they are to further fold out.
Peter Rosenstreich
Absolutely. I think once you take that risk aversion trade off the dollar’s back, you start having
to really focus in on the underlying fundamentals, the underlying corporate prospects. That
does not look good for the US economy; therefore, the dollar should not be the beneficiary in
this time. I think traders are going to start looking at this very carefully and start re-evaluating
many of their trades, especially in the Euro/dollar. You’ve noticed that. That trend again, as I
stated before, the correlation has come off. We’re not seeing the rapid gains as we have in
the Euro/dollar in past. That’s a reflection of the fact that there’s not that potential for earning
in the corporate side that’s driven a lot of the trading before.
Brian Shactman
Peter, it’s Brian here in the States. You know, it’s been a fascinating conversation because
there’s such disparate opinion about the long-term dollar outlook. I also have some people
that I’ve talked to that think that the Euro/dollar could go on par. Why are we getting such
different debates about the longer-term prospects of the dollar?
Peter Rosenstreich
Well, I think it’s – I wouldn’t say relatively clear, but we are at a precipice right now in global
marketplaces. We could very easily, from the economic data that’s been pouring out of the
developed countries, just drop off a cliff and continue to another round of deleveraging and
dollar buying. On the flip side, the market could very easily start taking a look at the
underlying fundamentals and say, ‘Well, this doesn’t warrant a stronger dollar, and we need to
start pricing this in and reverse the trade.’ Right now, we are almost at sort of an equilibrium
point at the 1.26 levels on Euro/dollar. There’s a lot of uncertainty on which way the markets
are going to move. That’s why you’re getting such a conflict between strategists, economists
and pundits around the world.
Maura Fogarty
Peter, it’s Maura. If I can just follow up, then. If you look at it, though, from a purely economic
standpoint on what’s going to get the big economies out of the dire straits they’re in at the
moment, should the dollar be stronger, or should the dollar be weaker from where it stands
right now?
Peter Rosenstreich
Well, we think that, in the short term, we’ll continue to see dollar strength. We’re looking for
the roughly 1.21, 1.20 levels. That’s mostly on the risk aversion trade. However, as you said,
if you start looking at the fundamentals, we think that the US economy is in very dire straits
and perhaps once of the last developed countries – I know this is a little bit counter to what
many of the analysts are saying on the street, but – one of the last countries to get out of the
recession. That’s going to not bode well for the dollar in the longer-term, and we’ll start
seeing Euro/dollar gain on the back of the fact that the US will probably stay in the recession
or sort of an economic downturn longer than people had expected.
Maura Fogarty
All right. Peter, thanks for joining us today. Peter Rosenstreich, Chief Market Analyst at ACM
– Advanced Currency Markets, joining us live from Hong Kong.
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