ggersh,
What else can they do? They could not keep running the inflation game, as they pushed that a bit too far. The Fed wants cheap rates and a cheap dollar.
And, the US absolutely still wants a cheap dollar, they just don't want to pay the price for all the raw materials needed to keep driving activity. So, they are trapped, by their own actions.
I think there is one other major driver of the dollar rally, and that is the abyss. The dollar at 72 was concerning many of our good <buddies>. You know, those guys in the middle east that love America. And I am fairly certain the Chinese were pissed off too. So, a little relief from a dollar rally promotes confidence that all is well, and please let the game continue.
The problem is, nothing fundamental has changed. Not one iota of actually improvement (unless you count a marginal improvement in the trade deficit), unpins the dollar move. So maybe, like Box has said, the dollar looked good this past month relative to the lofty value of the Euro. Things are going to be bad everywhere if the US monster consumer can't borrow and spend. And that is where I believe we are today exactly, and I have been saying forever, when that day comes and the rest of the world really believes it, then there is no incentive to keep the game going.
Stimulus checks round two, three, four anyone?
GT
TH |
