Everybody hates the dollar: James Saft

By James Saft

NEW YORK (Reuters) - There is a lot of uncertainty in financial markets, but there is one bet that almost everyone seems to be making: sell the dollar.

The U.S. dollar fell again on Friday against a basket of six major currencies .DXY, hitting levels not seen in that index's 30-year plus history. It has fallen more than 7.0 percent since the summer's financial ruckus started.

It is an unusually strong consensus, which is often an indicator to go the other way, but, well, there is a lot not to like.

The U.S. economy is likely to slow, if not contract, hurt by a deflating housing bubble, an excess of debt and a financial system that is hitting the lending brakes hard.

And while the Federal Reserve seemed to signal that this week's cut in rates might be the last for a while, if anything U.S. interest rates may decline faster and farther than those of most other major currencies, undermining support for the greenback even more.

This may be especially true if you believe, as do a vocal minority of analysts, that the U.S. will slide into recession, forcing the Fed to cut rates aggressively.

Others fear the reverse, that rising prices of energy, and the new phenomenon of inflation in China driving up prices at Wal-Mart, will drive up U.S. inflation, tying the Fed's hands and causing an unattractive mix of low growth and inflation, or stagflation.

In short, a lot of people doing the same thing for a lot of different reasons.

"In all the years I've been trading I've never seen such a one-sided position against the dollar," said Dennis Gartman, publisher of the Gartman letter, speaking at a Euromoney foreign exchange conference in New York on Thursday.

"It is absolutely shocking how overtly bearish the world is."

He also reports that classic sign of a market mania, a variation of the shoeshine boy giving stock tips, saying that a doctor had told him on the golf course that he'd opened an account in order to short the dollar.

Friday's U.S. jobs figure, showing 166,000 jobs created in October, double the expected figure, was a good example of how the dollar just can't catch a breeze.

Rather than rising on the data, which would seem to point to a more robust economy and higher interest rates, the dollar rose only briefly before hitting another record low against the euro.

Analysts said this was because reassuring data about the U.S. economy gave investors courage to put on risky trades, but nonetheless we end up with good economic news about the dollar driving the dollar lower.

And indeed if we are in a world where the U.S. economy is not falling apart, there are still better bets for growth and higher interest rates to be had in many emerging and commodity producing countries.