Don't Mess With the Dollar?

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Oct. 4 (Bloomberg) -- Wells Fargo's Nick Bennenbroek,'s Andrew Keene and Bloomberg's Julie Hyman discuss the dollar and the debt ceiling with Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Not going to go into default, but as we get closer and closer to the debt ceiling limit on the 17th, what might transpire in this currency?

Might we see that nervousness reflected in the dollar going even lower?

It seems like we have seen a little bit of that feed through already as the dollar has come lower.

It has to do not just with the debt ceiling and shut down themselves, but what they mean to the economy.

The perception is the economy is worsening as a result of these events, or sentiment is worsening, that is going to push out the federal reserve tapering.

We heard from the atlanta fed bank president, who says that a shortage of news, because we were supposed to have a jobs report today and did not, would tend to make him somewhat more cautious in terms of tapering the bond buying program.

If rates are going to remain relatively low, that would at least in theory mean that the dollar is not going to be able to gain much traction.

The consensus forecast is for the dollar versus the euro to get to one dollar 30 -- $1.30, which would represent an increase.

A lot of uncertainty.

Our kids do not like uncertainty.

Might this be an opportunity?

As you look at other shutdowns we have gone through, the economy really has not suffered.

The markets have not suffered.

They may have suffered temporarily.

Generally, on the year, we saw good news.

Would you advise people to start buying u.s. dollars as we get closer to the deadline and see more nervousness?

I would suggest perhaps buying the dollar.

We are focused on the adderall reserve, and the fact that perhaps what is happening might wish it out later.

In 2011, the credit ratings downgraded, there was a solution close to the mid-october deadline.

That is when you might see equity markets go to the downside.

I think that is when you get a chance for the dollar to recover.

There is an opportunity for people to see the dollar or view the dollar as a safe haven.

The safe haven relationship has not been as reliable or consistent, perhaps.

You do need things to get worse.

I monitor these negotiations.

Right now, there is a hope or expectation that we are not going to default.

When nervousness comes into play, i would probably look toward the dollar going long.

What would indicate to you that nervousness has come into play?

We are at an eight-month low.

We have seen the dollar suffered day after day.

Negotiations continue on.

What is the turning point where you say, people have thrown in the towel?

X we are starting to see short- term treasury yields, one month yields have gone up a little bit.

What i want to see is sharper declines in global equities.

We are down a couple of percent in terms of the s&p 500. i think we want to see more consistent and larger day by day false.

It is when the more severe concern starts to kick in.

And we have not seen that.

We were up on tuesday and are up today.

Andrew, what are you thinking?

The dollar has traded very weak.

I am looking at the uu p -- the uup.

It did bounce up.

As we have fear and panic, i think a deal gets done.

If we do not get downgraded, we should get a short-term bounce in the dollar.

The trade i am looking at is the december put spread.

I was going to put this on for a $.50 -- 50% -- $.50 credit.

I have a little cushion to the downside.

I am making a bet that the dollar will rise for here.

I could collect all of that premium.

What else should investors be thinking about right now?

The irony is that, as nick said, people are focusing on the fed rather than on these events themselves, the knock on effect, if you will.

You cannot only look at what is happening here.

You have to look at what central banks and economies are doing elsewhere.

The action of the dollar is going to have as much with what is happening at home as what is happening with the ecb, with the japanese central bank.

You have to look all around the world.

It is a point.

Our flesh monetary policy is hurting the dollar, a big component of all of this.

Coming up, you cannot always

This text has been automatically generated. It may not be 100% accurate.


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