04 May 2006

Savage Meltdown: HSBC says "Kiss the PetroDollar Goodnight"

Steve Johnson, writing in the Financial Times, reported Thursday that:
The euro leapt to a fresh one-year high against the beleaguered US dollar on Thursday as Jean-Claude Trichet, the president of the European Central Bank, made hawkish noises about the path of eurozone interest rates.

The euro’s rally also kickstarted a generalised decline in the greenback, which also hit one-year lows against sterling and the Swiss franc and an eight-month nadir versus the Australian dollar.
No longer is this type of talk coming from Marxists only. Rather, it's coming from major international bankers from HSBC, ING, and Citibank.
"This reflects a broad weak dollar environment. The market is using any excuse to sell the dollar," said Chris Turner, head of currency research at ING Financial Markets, who detected the invisible hand of central bank diversification from the dollar to the euro in recent price moves...

All this added up to another dark day for the dollar, which also fell 0.3 per cent to $1.8470 against sterling and 0.1 per cent to $0.7711 against its Australian namesake.

HSBC yesterday added its name to the list of banks arguing that regime change is afoot in the market, with structural worries over the twin deficits of the US taking over from rate differentials as the prime driver of the market. As a result, HSBC now sees the euro hitting $1.30 by the end of this year, rather than the middle of 2007 as it had previously forecast.

"We have thrown the towel in on the dollar," said [David Bloom, currency analyst at HSBC]. "If we get a good payroll number [today] and the dollar still goes down you can kiss it goodnight."
Uncle Sam's renegade status, even among capitalist countries, has rendered it an embarrasing liability to the cabal of international bankers who game the currency market. The news that they have started to betray the dollar should call those of us who oppose such institutions must at some point take note of this unfolding crisis of Capitalist hegemony that will result from a crash of the PetroDollar and plan accordingly.

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