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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum

GLD 383.12

+0.8%

Nov 26 4:00 PM EST

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To: elmatador who wrote (84565)	12/14/2011 8:32:59 AM
From: Hawkmoon	Read Replies (1) of 218050

One popular theory doing the rounds among currency analysts is that European banks have been supporting the euro by selling overseas assets and bringing the money back home. When that trend comes to an end, the theory goes, the euro could fall sharply." Makes me wonder if the Fed's Dollar swaps are being overwhelmed by Euro selling. zerohedge.com And given the correlation between a rising dollar and declining US equity market (as well as commodities), I'm wondering at exactly what point this arbitrage decouples and money flowing into the USD and treasuries also flows into equities as well, if at all.. Given the seemingly unlimited leverage and re-hypothecation that existed in financials markets like London, the unwinding of these trades seems to suggest continued upside for the USD. I think this has the Fed extremely worried that it could derail any US recovery. As for the Euro, it stands to reason that the only way they can find any form of economic recovery is for the Euro to decline against other currencies so that they can prop up their exports. I really see 1.20 being seen again, and quite possibly a break of "par" for the Euro at 1.19 and then down. Should it do this, it will be a LONG time before the Euro rises back above that level. Damn Chinese Curse!! Hawk

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