Front and center this morning the Big Dog (euro) has left the porch and is chasing the dollar down the street! I got home yesterday afternoon, rested, and then checked the currencies at the NY closing before they handed the books over to Japan, and saw that the euro (EUR) had leap-frogged to the 1.39 handle! WOW! What was going on?

Well… First of all… Didn’t I tell you long ago that whenever the fundamentals returned to the markets that had been absent since July of 2008, we would see the dollar return to the underlying weak trend? OK… I don’t know if this is “exactly” what’s happened, but I do know this… The negativity toward owning dollars is growing like a nut-grass weed does on hot summer days. I also know that ever since the euro moved higher than its 200-day moving average on May 8th, there’s been little or no looking back. And… To finish this up, people are beginning to notice the monetary policies of the U.S., the rising deficits, the supply that’s needed to finance the deficits, and… The thought that the U.S.’s credit rating could be downgraded… OUCH! Hey! That’s going to leave a mark!

Seriously though… This would not be a good thing… You know, Bill Gross of PIMCO, the world’s largest bond house, right? I’ve quoted him on quite a few occasions in the past… Well, anyway, Bill Gross, said that he believed that the U.S. would eventually lose their Triple A (AAA) rating…

Don’t look for any answers from that crew on CNBC! Don’t know if you caught my appearance on the CNBC Power Lunch yesterday… But, they had this “lynching mob” ready and waiting for me… I was told by the producer that I would get a chance to tell my “story” on the comment I made the other day about the PPT. (Plunge Protection Team) BUZZZZZZZZ, WRONG! Thank you for playing, there’s a nice parting gift for you at the door! As I tried to put the whole thing into context, one of the “lynch mob” said to me, “You’re losing me”… Oh really? You only have an attention span of 1 minute? Any way… I know, I know, these guys are there to entertain, not inform… and they thought it was entertaining to mock me, rather than listen and maybe have their viewers informed…

OK… I know, my public relations people will be reeling this morning when they read that, but… I just had to get it off my chest. The mass media is so to blame for a lot of this mess we’re in… The sat there and said nothing… They looked the other way, while the government slowly tears at our Constitution… OK, I had better stop now!

Back to currencies, because THAT’S the story of today! It sure looks like the scene we’ve seen before when the dollar reaches this threshold of major weakness again… It looks like the scene, it smells like the scene, walks like the scene, it must be the scene! The dollar is once again on the threshold of major weakness!

Why do I think the “fundamentals” have come back into play? Well… Bad data… Since July of last year, we’ve been in this funky trading theme that rewarded the dollar, every time things looked bad in the U.S. for the economy… However, in the last week, we’ve begun to see a change… Not a “sea change” yet… But a change… And this is when you want to get in on something, not after the “sea change” has come! Then you’re chasing the market…

Yesterday’s bad data came on two fronts, one that everyone had the chance to see, and one you would have to pay close attention to… 1. Initial Jobless Claims rose again last week. This time to 637,000, which was higher than forecast, and the previous week’s number was revised upward… And then number 2. The Fed left the markets out on a line… You see they did NOT purchase as many Treasuries as the markets believed they would… On the outside that would seem to be a good thing… But underneath the covers, things are different… The markets took this lower bond purchase by the Fed as an indication that they will have to come back and do more later, as the Fed attempts to hold down long term Treasury yields… And in doing so… The dollar will get stuck in the middle. In fact, here’s the dollar’s new song… Clowns (bad data) to the left of me, Jokers (the Fed) to the right, here I am stuck in the middle with you!

Yesterday was also a very bad day at Red Rock for not only the dollar, but stocks, and bonds! You don’t normally see days like that… I read somewhere that there have only been 18 days since 1990 that we’ve seen a day like yesterday! Stocks and bonds both getting sold? Where were the funds going from those sales? Ahhhh grasshopper, this is playing out just as I told you it would when the safe haven buying of Treasuries were reversed… The funds, yesterday, were obviously going toward currencies and metals!

And, the currencies and metals have added to their gains from yesterday in the overnight markets! And going into a thinned out Friday, before a holiday weekend, trading… This could get ugly for the dollar today… If I had been standing on the sidelines waiting to get in, I don’t think today would be the day… Although the currencies might continue this move higher, I just don’t think that chasing a market in a thinned out market, is the prudent thing to do… And on the other side, we could just as easy see a big sell off today… Because, as I always tell you, be yourself! No, wait, that’s Tutor Turtle and Mr. Wizard talking… I always tell you that in thinned out markets, you can see wild swings…

OK… So it wasn’t just the euro kicking sand in the face of the dollar bulls yesterday… All the little dogs were able to get off the porch and chase the dollar down the street too. For instance the Canadian dollar/loonie (CAD) reached .8875, a level it hadn’t traded at since October of last year! Aussie dollars (AUD) has a 78-cent handle, something it hasn’t seen since October of last year… And look at the Indian rupee go! And gold is $955!

When we return on Tuesday of next week, the data cupboard will be overflowing with data here in the U.S. All sorts of Housing data, which I can’t see as anything good for the dollar, given the new direction and return to fundamentals.

This article originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a “uniquely refreshing” perspective on the global economy, investing, and today’s markets. Follow the Daily Reckoning on Twitter.

Stocks, Bonds and Dollars All Get Sold

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Thursday wrapped up another day of strange intra-day movement in regard to historical commodity/currency links; the Usd gained in the face of higher oil and gold prices, and was not at all impacted by the move in global equity markets to reach up to test near-term resistance areas. The fact…

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By Simon Rabinovitch, Reuters

BEIJING (Reuters) – The United States has plundered global wealth by exploiting the dollar’s dominance, and the world urgently needs other currencies to take its place, a leading Chinese state newspaper said on Friday.

The front-page commentary in the overseas edition of the People’s Daily said that Asian and European countries should banish the U.S. dollar from their direct trade relations for a start, relying only on their own currencies.

A meeting between Asian and European leaders, starting on Friday in Beijing, presented the perfect opportunity to begin building a new international financial order, the newspaper said.

The People’s Daily is the official newspaper of China’s ruling Communist Party. The Chinese-language overseas edition is a small circulation offshoot of the main paper.

Its pronouncements do not necessarily directly voice leadership views. But the commentary, as well as recent comments, amount to a growing chorus of Chinese disdain for Washington’s economic policies and global financial dominance in the wake of the credit crisis.

“The grim reality has led people, amidst the panic, to realize that the United States has used the U.S. dollar’s hegemony to plunder the world’s wealth,” said the commentator, Shi Jianxun, a professor at Shanghai’s Tongji University. Read more….