US Dollar Charts for Monday 22 September

NYMEX Oil Trading Halted at $116 as Crude Goes "Limit Up," Reopens and Rockets to $130 in Ten Minutes

Time for a 'no buy' zone?

After the "limit up" trading halt oil trading reopened and is now $130 four minutes before the close. This was in the October contract which was set to expire. The new front month is November. There was an obvious short squeeze occurring in the near month.

Part of the reason for this is obviously dollar weakness. The DX index is now testing the 76 area. Also since the hedges cannot short financials, they need some way to arb the Treasury recklessness, so they appear to be running into harder currencies and commodities.

Just peeled off some of the oil trade positions we put on for ourselves yesterday as a contra dollar play. We're keeping the high yield oil stocks/trust because this seems to be more than just a technical trade with almost all commodities rising in concert.


Oil spikes $25 a barrel on anxiety over US bailout

(AP:NEW YORK) Oil prices spiked more than $25 a barrel Monday - the biggest one-day price jump ever - as anxiety over the government's $700 billion bailout plan battered the dollar and touched off frenzied buying of safe-haven investments including crude.

Light, sweet crude for October delivery jumped as much as $25.45 to $130 a barrel on the New York Mercantile Exchange before falling back somewhat to trade at $122.60,up $18.05. The contract was set to expire at the end of the day, adding to the volatility; the October price began accelerating sharply in the last hour of regular trading.

The November contract, scheduled to become the front-month contract at the end of Monday's session, was trading at $108.80, up $6.05.

Crude has gained about $40 in a dramatic four-day rally that has at least temporarily halted oil's steep two-month slide below $100. At this rate, crude is within striking distance of its all-time record of $147.27, reached in July.

"We're off to the races again in crude," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill. "There's a renewed scramble for commodities because of a general weakness in the dollar."

The Nymex temporarily halted electronic crude oil trading after prices breached the $10 daily trading limit. Trading resumed seconds later after the daily limit was increased.

The huge rally was poised to shatter crude's previous one-day price jump of $10.75, set June 6.

Oil's sharp gains came as energy traders grappled with the implications of the government's proposed $700 billion initiative to stem the U.S. financial crisis by absorbing billions of dollars of banks' bad mortgage-related securities. Anxiety over the plan also sent stocks sharply lower Monday; the credit markets were calmer than they were last week, but still showing the effects of investors' nervousness.

"They're going to have to continue auctioning off a whole lot of Treasurys to finance these projects, so the dollar is going to suffer," said Matt Zeman, head trader at LaSalle Futures in Chicago. "Right now it's fear and anxiety driving people who want tangible assets.

The 115-nation euro rose to $1.4781 in afternoon trading, up from the $1.4470 on Friday. A weak greenback was a catalyst for the commodities boom of the past year, and analysts said large investment funds were expected to pour money back into the sector.

"That trade was very successful in past so if the dollar keeps weakening, a lot people are going to want to own hard assets like crude," said Andrew Lebow, senior vice president and broker at MF Global in New York.

But there is still much uncertainty about what impact the U.S. rescue plan will have on energy demand. Oil's run-up near $150 a barrel in July and a weak U.S. economy has forced Americans to cut back on their driving and led business to scale down operations. Though pump prices have eased from record levels above $4 a gallon, they remain expensive, and more softening in the economy would likely further curtail energy use in the world's thirstiest consumer.

"There are a lot of issues to be filled in. It's an extraordinarily complex situation," said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. "The market is digesting how the (rescue) package will work and the implications for the U.S. economy."

U.S. congressional leaders endorsed the plan's main thrust, saying passage might occur in a matter of days. But they also want independent oversight, protections for homeowners and constraints on excessive executive compensation, House Speaker Nancy Pelosi said Sunday.

Treasury Secretary Henry Paulson pushed lawmakers, who received the package on Saturday, to approve the proposal as soon as possible....

TDAmeritrade Freezing All Reserve Money Market Funds Including "Treasury Funds?"

Read from a usually responsible poster on a financial web site here. here.

Most of my swept cash at TDAMeritrade has been frozen, and removed from funds available for trading.

The Treasury Money Market Fund that was my swept funds destination apparently is a Reserve Fund, the family which has been in the news. As nearly as I can figure, it had zero exposure to Lehman, but apparently the big review underway has frozen all Reserve Funds until review is complete.

How can a Treasury fund have any exposure to Lehman?? Then why would they freeze it and put it under review???

Someone has suggested that this is because of 'heavy redemptions' and/or a mutual support agreements among fund families.

We'd like to believe that this will turn out to be a mere inconvenience and will probably work out all right in the end.

But the more general lesson here perhaps is that you might think you own Treasuries, gold, silver, oil, forex or whatever through a fund, but at the end of the day you own the fund, and have only a claim on the asset or instrument of your intentions itself.

Unintended Consequence: the US Finally Gets a Decent Soccer Team

The Manchester United football team is sponsored by AIG, and have the letters AIG across the chest of their jerseys.

Now that AIG has been acquired by the government, the Treasury intends to replace the "AIG" designation with "USA" and the appropriate logo changes.

The use of the term "football" which is the exclusive property of the NFL is going be replaced with the more descriptive term "soccer" to avoid confusion in the target audience, the American public.

As the Dollar will be the exclusive currency accepted within the stadium, a special facility has been created to build bureaux de change at the entrances. Barclays is said to be bidding for the exclusive operating rights.

The European Union is expected to support these modifications at the request of the Treasury.

The NY Fed is considering rules changes to make the games more exciting.

Hank Paulson has hired Morgan Stanley to assess the sponsors of some of the better German and Italian clubs to see if Wall Street's expansions plans to dominate the soccer world are feasible.

The SEC, having misplaced its traditional charter, has proposed to be renamed the Sports Expropriation Commission. Their first task will be to determine what the Chinese do with their leisure time in addition to gymnastics, mahjong, and eating remarkably unusual items.