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Strategies & Market Trends : The coming US dollar crisis
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To: Secret_Agent_Man who wrote (3974)2/6/2008 11:16:47 PM
From: Real Man  Read Replies (1) of 71410
 
Here is an alternative explanation of the dollar "rally"
(or, should I say, bounce)
Which means, as soon as the stress is a bit relieved and
stocks bounce (HA! sounds improbable now), the dollar could go
Ka-boom, pricing all 125 bp. of the cuts

Squaring up of risk positions

USD is the main vehicle for executing arbitrage trades around the planet.

Many positions are centred around selling dollars and buying other currencies.

When things get turbulent there is a rush to square up risk positions and hence dollar rallies.
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