Is the Dollar Tumbling Because of the Dow?

By Kathy Lien, Chief Strategist strategist@dailyfx.com
The Dow Jones Industrial Average tumbled over 100 points today, bringing the US dollar down with it. The most significantly weakness has been seen against the Japanese Yen, Australian and Canadian dollars but the fact that the US dollar has held steady against the Euro and British pound indicates that this is not a dollar story.

True economics is back in play as the price action of each currency pair reflects the country?s own outlook for interest rates. Take the AUD/USD for example. It is the best performing pair of the day because the market now believes that the Reserve Bank of Australian will raise rates this year. The EUR/USD on the other hand is weaker because the comments from ECB President Trichet today suggests that the central bank will be hold at least until September. Unit labor costs and productivity were the only pieces of data on the US calendar today and these final quarterly releases are never major market movers. Therefore even though productivity slowed in the first quarter while unit labor costs increased, the US dollar did not budge. Instead, everyone has their eyes on the US stock market which dropped after Morgan Stanley issued a triple sell warning. This was the first time since the tech bubble burst that all three of their key warning indicators which follow P/E ratios, growth, inflation and risk appetite call for a correction. In fact, their model is predicting a 14 percent drop over the next six months. We have said often that carry trades will die with the Dow dies. Now that it is beginning to, we are seeing the currency component unfold as well. Therefore should the weakness in stocks continue, we expect to see a further sell-off in USD/JPY. The hawkish comments from Federal Reserve Presidents Lacker and Pianalto suggest that central bankers are happy with the correction. Wholesale inventories and wholesale sales are the only US releases on the docket tomorrow so we do not expect any major price action in the US dollar. Continue to watch the Dow for direction.


Make money with zanox Look@SEM

Choosing an Arizona Lender

When you decide to move to Arizona, the first thing you want to begin doing is looking for a home and an Arizona lender to finance your new home. Some people choose to do this before they move in order to have everything in place when their move is final, but others want to wait until they arrive so that they can physically see the property they are buying. The problem with waiting is that you delegate yourself to an apartment or hotel until you find a home and an Arizona lender to finance it, thus you incur expenses for storage of your furniture and other belongings that won't fit into your temporary residence.

Even if you are going to wait until you arrive to find a home, you can still choose an Arizona lender to finance the purchase. Many mortgage companies today offer pre-approvals on their websites or over the telephone, so if you do nothing else, you can obtain approval for your mortgage and look for the home when you arrive at your chosen destination. Keep in mind that the pre-approved mortgage has an expiration date, so if you are not planning to eave for six months or more, you may want to wait before you apply for a pre-approved mortgage, or it may not be valid when you arrive. Depending on the Arizona lender you choose, thee may be other criteria you must meet once you arrive, so make sure that you don't take on any additional credit and that you don't miss payments on any of your loans or payments in case they decide to run another credit check when you actually submit your application.

Before you can choose an Arizona lender, you may want to make certain that you know the area where you want to live, especially if you want a local lender. If that isn't important, you still want to make sure that the Arizona lender you choose is willing to finance property in the area of your choice. Sometimes lenders have a policy concerning areas they are interested in financing, especially local lenders. They may want property that is within a certain parameter of their office in order to maintain closer contact with the homeowner, so you want to be sure if there are any distance requirements before you apply. It doesn't always happen that there are regulations on areas, but it does happen sometimes with small lenders who may not have the ability to travel outside of their regional area.

Why Short-Term Savings?

Have you got an emergency fund in place? If you lose your job or suddenly face some large, unexpected expense, are you prepared? Are your short-term dollars invested in places where you'll earn as good a return as you can get? If you muttered "No" to any of the above questions, do yourself a favor and spend a little time in our Savings Center.

Here's a snippet of it to give you a taste:

Everyone needs some short-term savings. In fact, most people need a big pot of them, stashed somewhere safe and easily accessible. By "short-term savings," we mean the money you'll need for emergencies and for big expenses you'll incur over the next three to seven years, depending on your tolerance for risk, volatility, and a market-induced change of plans.

In this short-term savings area of The Motley Fool, we'll talk about places to put the money you need at the ready -- checking accounts, savings accounts, money market accounts, certificates of deposit, money market funds, and short-term bonds -- and the pros and cons of each investment. We'll help you figure out how much you may need and the circumstances under which each type of investment may be right for some portion of your more liquid assets.

When we say "liquid assets," we're not talking about oil or vintage wine. Think of "liquidity" as the ability to be quickly and easily poured from one vessel to another with little loss. Cash is the ultimate in liquidity. It's welcome everywhere, there are no costs associated with using it, and it's always worth exactly what you think it's worth (except in cases of international currency exchange). By contrast, real estate is not very liquid. It takes a long time to convert it into a readily transferable form, and you tend to "spill" quite a bit -- a whole bucket load of commissions and closing costs. In between cash and real estate is a range of investments, with varying levels of liquidity.

What could happen if you don't have short-term savings? One of two very unfortunate things:


Emergencies or even should-have-been-foreseen expenses will spring a credit card trap on you that can take years to escape from. How Foolish it is to have the money you'll need soon safely accruing interest instead of charging that valve job or honeymoon and paying double-digit interest rates on it for years.
To cover a sudden (or not-so-sudden) expense, you may have to sell assets, such as stocks, that were intended to cover long-term goals. Consider this all-too-likely scenario: You put all your spare money in the stock market and suddenly you need $2,000 for car repairs. Unfortunately, this happens during a time when the market is down, and you have to sell your stocks at a loss. Plus, that money is no longer invested, so you'll miss out on future growth.
Though your short-term savings will never rival returns on stocks over the long term, we certainly think that short-term money needs to earn its keep, countering inflation and maybe earning a little more. You've got several options on where to keep your short-term stash. But first, you need to do a bit of financial self-reflection to determine how much short-term savings you need and when you'll need it.

To learn much more about how to invest some short-term funds, visit our Savings Center. You'll find everything you need to know to get started toward your goal of financial security.


Klassik Card

Unabhängigkeit von der Hausbank durch separaten Kreditrahmen. Guthabenverzinsung von derzeit 1,7%. Wo? – Bei Tarifcheck24.de