In This Issue.

*  Currencies kick sand in the dollar's face.
*  Gold moves above $1,300.
*  Canada prints a strong BOS report.
*  What's China up to?

And Now. Today's A Pfennig For Your Thoughts.

A Dollar Rout Is On!

Good Day! .  And a Tom Terrific Tuesday to you! A very wet, rainy, raw, Opening Day, could not ruin the celebration for our team yesterday, and my beloved Cardinals held on to win their Home Opener. That whole process of getting downtown, trying to find a decent parking spot without paying $50, and all the while missing my afternoon nap turned out to be too much for me, as I collapsed in my chair upon arriving home last night. I'll need to catch up today!

The currencies and metals are playing catch up this morning as they rally on dollar weakness. I say playing catch up, because this is long overdue, folks. I look at the data, the news, the research every day, and from what I see, the dollar should be getting sand kicked in its face daily. But that hasn't happened on a regular basis for some time now, but today. Today, the two asset classes of currencies and metals are on a roll! Hey! Don't' stop them, they're on a roll I saw some research from a big brokerage firm the other day, of whom I will not mention, and they are still on the bandwagon that 2014 is going to be the year of the dollar. So, I'm sure they are looking at the currency and metals screens this morning and digging in their heels, and saying. “It's not over! Was it over when the Germans bombed Pearl Harbor?” HA!

On a sidebar here. You do know that the line about the Germans bombing Pearl Harbor is from the movie Animal House, right? Yes, I'm quite aware of who bombed Pearl Harbor.  A few years ago, I used that line, and actually had people send me emails correcting me as to who actually bombed Pearl Harbor! HAHAHAHAHAHA!

There's not much in the way of news overnight that has caused this dollar weakness. The Bank of Japan (BOJ) left policy unchanged last night. The markets were convinced that the BOJ would announce additional stimulus, as the BOJ is not happy with the yen's failure to weaken further.  But they refrained from giving the markets what they wanted, and that led to a yen rally! The dollar weakness had already given yen a boost, and then this BOJ unchanged policy announcement really pushed yen higher.

I told you yesterday, that the Aussie dollar (A$) had climbed to 93-cents on Friday, but was unable to hold the figure. Well, in the overnight markets the A$ has held 93-cents and in fact has traded much higher to .9337, as I write. I'm told that the chartist that use Fibonacci  method, say that .9339 is the limit for A$ at this time. This is where I would love for the A$ to blast through that figure and not look back to prove those guys wrong! Fundamentals RULE!

Yesterday, I told you the rate cut expectations would either take a hit or get a boost by the Bank of Canada's Business Outlook Survey (BOS).  So, the BOS printed yesterday mid-morning, and the report told the markets what I've been telling you.. That the Canadian data has been better.  The BOS showed greater strength in the economy, although still below capacity. The thing I thought was good was the opinion on machinery and equipment, which I always tell you is a strong indicator that the economy is picking up, increased 2 points to 21 from 19. But back in the 3rd QTR of 2013 this indicator number was all the way down to 7!   The loonie tried to rally on the news, but I guess the rate cut campers still were completely sold on the no rate cut by the BOC.  But then along came Jones.  And the U.S. dollar weakness was a perfect excuse to run the rally flag up the pole for the loonie, and this morning loonies are hanging .9150 on the rally flagpole!

And one thing I noticed overnight was that the currencies are rallying in spite of a selloff in U.S. stocks yesterday, which is good for the breakup of the Risk On, Risk Off trading pattern, that we seem to slip back and forth into this past year. I sure would welcome an end of that Risk On, Risk Off stuff, and the asset classes getting back to having low correlation to each other!

Well. On Monday, China was on holiday,  and the markets were holding their collective breath as to what the Chinese would do with the price direction of the renminbi /  yuan, after marking it down most of last week, and leaving it at 6.1557 on Friday. There are some important data prints due later this week from China, like their latest Trade data on Thursday, and inflation data on Friday, so what direction would the Chinese choose for the renminbi / yuan last night? The Chinese chose to allow the renminbi / yuan to appreciate 30  to 6.1527. So, not a HUGE move, nor a clear direction from the Chinese, which makes sense given the magnitude of the data prints last this week.

On Bloomberg this morning, they have a story on how the top yuan forecasters predict a rebound for the currency. Nomura Holdings, who had the best estimates on the currency for the past 4 quarters says that the renminbi/ yuan will appreciate 3.3% by year end. 

Of course that's not really going out on a limb now is it? I mean the Chinese have been very consistent about the 3% gains per year in the renminbi. But, hey! They are the best and they say 3.3% by year-end. 

On a sidebar. a dear reader sent me a link to an article by Jim Willie. Jim has been a writer/ analyst for a long time, and gets pretty excited about stuff. Well, he said in his latest note that , “The new Shanghai Free Trade Zone is fast forming. It will feature a fully convertible Chinese yuan by June, not two years. It will happen this summer.”  

Chuck again.  I must say clear here, that this has to be rumor. I haven't seen anything from China that indicated that this was the case, BUT! I have been telling you for some time now that it appeared to me that the Chinese were really moving fast toward convertibility. So.. Maybe.

And don't forget that the U.S. is monitoring the direction of the Chinese currency, and the U.S. is not happy about the recent weaker direction of the renminbi / yuan.  As always, I'm sure China is shaking in their boots, about the warning the U.S. sent to China about the currency weakness. NOT!

OK. back to our regularly schedule programming. It appears that we'll have some Fed Speak today with 3 Fed Heads on the speaking circuit. 2 are doves, Evans and Kocherlakota  and 1 is a hawk, Plosser. With the doves outnumbering the hawk, we could see this dollar weakness continue throughout the day today.  But then we haven't seen what the PPT have up their sleeves, as most of this dollar weakness took place while they were dreaming of sugarplums dancing in their head!

The IMF is due to issue their latest global economic outlook today. As if I care what the IMF has to say. But the markets do, so I must play along. and if the IMF is truthful they will give an upward revision to the Eurozone.  the IMF also throws their hat in the inflation forecasting ring, and so, their outlook for the Eurozone inflation will go a long way toward keeping the euro on the offensive with the dollar.

Well. I'm anticipating a new Monetary Authority of Singapore (MAS) meeting that will take place soon. The MAS, as I've explained many times in the past, do things differently that other countries in that they use exchange rate rather than borrowing costs as its main policy tool to fight inflation. We'll have to wait until April 14 to see what the MAS wants to do, but I wanted to get this on our radar and calendar to watch, as I think the MAS will keep their position of allowing currency appreciation to fight inflation in place, and that will be good for the Sing dollar!

Gold is up $15 this morning. I found it kind of funny that Bloomberg ran a story saying something about how Gold's rise is over. and then I see a story titled: Gold is least preferred metal as Morgan Stanley predicts decline.. Oh well, the shiny metal will just have to prove them all wrong, as it is doing this morning!  But, I always have to temper my excitement about a Gold rally in the early morning, as we've seen so many times in the past, the price manipulators can make short work of taking care of that rally!

And the price of Oil is back above $101 this morning, after briefly slipping below $100 for a couple of days last week. The latest rise above $100 is being associated with the speculation that Gasoline inventories probably shrank by 1 million barrels last week. Well, you have that, and then the stuff going on in Russia and Ukraine.

The U.S. Data Cupboard is pretty barren today, with only a couple of 3rd tier data prints to offer, so unless the PPT wants to do something about this dollar weakness today, the dollar is on its own for the day!

Before I head to the Big Finish today I wanted to share a cartoon with you that Ed Steer ran in his letter this morning that plays well with stuff I talk about all the time. .   You have this guy that has all these dark clouds over his head and in each dark cloud is a problem for him. Wage Stagnation, Rising Food Prices, Rising Medical Bills, Rising gas prices, Rising Housing Costs, College tuition skyrocketing.   He looks very dreary, and then some Gov't looking official asks him. “Why aren't American's like you saving more for retirement?”   OK, not really funny, but a true playing out of what's happening!

For What It's Worth. A dear reader from “down under” sent me a link to an article on the U.S. etc. (Thanks Robert!) In it I found some information that I'll go through here in the FWIW section today.   I keep telling you all that the Fed Heads are being overly optimistic about the economy. Well, it's not just the Fed Heads. I read a ton of stuff each day, and listen to people talk, and they've got the sunshine and lollipops song playing at all times.   But, if all that sunshine and lollipops were real, would we be staring at things like:

.               Quiznos has filed for bankruptcy, USA Today reported, and could close many of its 2,100 stores.

.               Sbarro which operates pizza and Italian restaurants in malls, is planning to close 155 locations in the United States and Canada. That means nearly 20 percent of Sbarro's will close. The chain operates around 800 outlets.

.               Ruby Tuesday announced plans to close 30 restaurants in January after its sales fell by 7.8 percent. The chain currently operates around 775 steakhouses across the US.

.               An unknown number of Red Lobster stores will be sold. The chain is in such bad shape that the parent company, Darden Restaurants Inc., had to issue a press release stating that the chain would not close. Instead Darden is planning to spin Red Lobster off into another company and sell some of its stores.

.               Ralph's, a subsidiary of Kroger, has announced plans to close 15 supermarkets in Southern California within 60 days.

.               Safeway closed 72 Dominick's grocery stores in the Chicago area last year.

Or that:   One Billion square feet of retail space is sitting vacant in the U.S.

                Radio Shack is going to close more than a thousand stores. Staples is going to close 225 stores. Office Depot        has seen same store sales decline for 13 consecutive quarters. JC Penney lost $586 million dollars in the        2nd Quarter of 2013 alone. Sears has seen their sales numbers decline for 27 quarters in a row.  Target is Going to eliminate 475 jobs and not fill 700 positions that are currently empty. Aeropostale will close about 175 stores, and so on.

Chuck again. This is just a sector, retail, that is suffering.  the economic weakness is everywhere, folks. when will the Fed Heads see it like it really is?

To recap. The dollar has been sent to the woodshed overnight, and there's not a lot out there to blame the weakness in the dollar on. The currencies and metals are all rallying, including yen, which saw the BOJ leave policy unchanged when there were calls from the markets to add stimulus. The BOC's BOS was stronger than expected and gave the loonie a nice boost overnight. We have 3 Fed Heads out speaking today, 2 doves, 1 hawk. And Gold is up $15 this morning so far.. what do the price manipulators have up their sleeves today?

Currencies today 4/8/14. American Style: A$ .9330, kiwi .8675, C$ .9155, euro 1.3780, sterling 1.6715, Swiss $1.1295, . European Style: rand 10.4510, krone 5.9740, SEK 6.5045, forint 221.60, zloty 3.0285, koruna 19.8915, RUB 35.56, yen 102.40, sing 1.2530, HKD 7.7545, INR 60.12, China 6.1527, pesos 12.96, BRL 2.2185, Dollar Index 79.90, Oil $101.28, 10-year 2.71%, Silver $20.14, Platinum $1, 439.63, Palladium $775.70, and Gold. $1,311.87

That's it for today. Well, congrats to U-Conn as they are the NCAA Basketball Champions for 2014. I didn't see the game as I fell asleep in my chair. UGH!  The game didn't start until later, so I wouldn't have seen the 2nd half anyway! I guess I'll have to write another letter to the Cardinals and complain about what happened yesterday. All the reports said that the gates would open at 1:15. That didn't happen. But what I think the Cardinals could have done to make the fans happy that were standing in the rain waiting for the gates to open, is to open them early and let the fans come in and get out of the rain!  I think they missed a golden “good Samaritan” opportunity! They didn't look like they could squeeze one more person into the new Ballpark Village. and even with all the rain and cold, more than 47,000 people showed up to celebrate last season, and start this new season with their team. Amazing. OK. time to go! I hope you  have a Tom Terrific Tuesday!

Chuck Butler
EverBank World Markets