Moody’s likely to downgrade Greece and Brazil buying more $

Seems no one wants a strong currency anymore, but instead wants to keep their real wages down.

So fears of a dollar crash seem again to be overblown.

Nor is there any immediate risk of inflation from excess demand.

The cost push risk from the Saudis hiking prices remains, and so price is unpredictable with demand relatively flat

The situation in Greece seems to be binary, based on political decisions.

Also markets are already discounting maybe a third of what happens if they get it wrong.
So betting one way or the other has a lower risk/reward than a few weeks ago.

US economy looking internally ok with risks remaining external- greece, china, etc.

On Thu, Apr 29, 2010 at 3:09 PM, EDWARD wrote:
BBG:
‘ Moody’s said it has previously indicated that a “multi-
notch downgrade” is likely and the specific lowering “will
depend on the level of ambition of the multi-year economic and
fiscal program.”’

BRL:
*BRAZIL’S TREASURY DOLLAR PURCHASES HINGE ON REAL STRENGTH
*BRAZIL’S TREASURY MAY DOUBLE DOLLAR PURCHASES TO PAY DEBT
*BRAZIL DOLLAR PURCHASES TO STEM CURRENCY’S RALLY, AUGUSTIN SAYS
*CORRECT: BRAZIL TREASURY MAY STEP UP DOLLAR PURCHASES
*BRAZIL SOVEREIGN FUND TO BE USED WHEN NECESSARY, AUGUSTIN SAYS
*BRAZIL SOVEREIGN FUND MAY BUY FOREIGN CURRENCY, AUGUSTIN SAYS

It appears that the sovereign fund will be used as a mechanism to affect the BRL and thus policy tool of the government from these headlines (which seems a little odd for sovereign wealth fund whose assets were acquired by foreign exchange policy implementation, unless they are talking about investing in USD assets along with USD buying). More details/clarification to follow.

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