Forex Video : Dollar Overview

On CNBC Squawk Box ACM Advanced Currency Markets Chief Market Analyst Peter Rosenstreich gives an overview on USD

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Name: Peter Rosenstreich
Position: Chief Market Analyst
Company: AC Markets
Date: 03/10/08
Time: 07:26 CET
Channel: CNBC Europe
Duration: 2 mins 56 secs
Interview with Peter Rosenstreich

Louisa Bojesen
I’m also joined by Peter Rosenstreich. He’s a Chief Market Analyst at Advanced Currency
Markets. Peter, I want to pick up on the strong dollar that we’ve seen over the past couple of
days. We’re set for the biggest weekly rise in the dollar against the basket of currencies that
we’ve seen for some 16 years. Now, if we see a $700bn bail-out package passed by the
House of Representatives in the US, are we going to see further dollar buying?

Peter Rosenstreich
I believe so. I think it will provide some level of confidence in the market, and that’s usually
dollar-positive. You know, the remarks from Trichet in the ECB meeting yesterday were also
very heavily skewed to a dollar-positive type of event, so we believe we’ll continue to see
strong moves on the dollar, perhaps not as aggressive as we’ve see in the last two weeks,
but we’ll continue to see appreciation in the dollar, Euro/dollar: 1.35 in the relatively near term.

Louisa Bojesen
Peter, when looking a bit closer at what’s leading to dollar buying, it’s not just down to this
rescue package. I was looking at the 3 month dollar Libor rates, up by a full percentage point
that we’ve seen over the past two weeks alone. It’s really a squeeze that we’re seeing of
companies attempting – or of companies and corporations attempting to get a hold of dollars
in any way, shape or form that they can, as everything supposedly has dried up at the
moment.

Peter Rosenstreich
Yes; I mean, dollar funding is very, very low right now. It’s hard to get a handle. Banks are
willing to pay for anybody that’s willing to put up dollars. We’re seeing that in the FX market,
and that’s also helping that massive dollar surge that we’ve seen, just from (more than
anything else) a supply and demand dynamic taking effect in the FX market, and helping the
dollar appreciation.

Martin Baccardax
Peter, I want to ask you about a couple of off-the-runs at the moment with respect to the
Swissie and the Yen. Just can you tell us a little bit about what’s driving momentum? I
personally have been a little bit confused by the movements of late, and I know viewers have
as well. Maybe if I could just get your thoughts?

Peter Rosenstreich
Well, I think the better currency to look at would be the dollar/yen, and the yen specifically.
We have a combination of fact. On one side, we have the risk aversion trade that’s giving it
somewhat support, and on the flip side, we have an enormous deterioration in the Japanese
yen, the underlying economy. The Tankan report came out worse than expected. It looks
like, when all is said and done and the smoke clears from the financial turmoil, we’re going to
have a Japanese economy that’s clearly in a recession, and that needs to take its toll on Yen
pricing. Right now, the volatility that we’re seeing between the 103-106 levels reflects the
enormous amount of uncertainty on exactly how to price the Yen in this sort of dynamic
environment.

Louisa Bojesen
Peter, thank you for being with us this morning. Have a good day. Peter Rosenstreich, Chief
Market Analyst at Advanced Currency Markets.