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Strategies & Market Trends : Currencies and the Global Capital Markets

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To: Chip McVickar who wrote (1589)5/19/1999 10:30:00 AM
From: Henry Volquardsen  Read Replies (1) of 3536
 
I think we are coming at it from different directions and what we are saying is not necessarily contradictory. I'm coming from the aspect of what the dollar's response would be to possible Fed action scenarios. You appear to be coming from the direction of economic growth being the motivator. Reality will be a stew.

I agree that if world growth returns and remains solid it is probable, but not inevitable, that the dollar would weaken. But if the dollar did weaken that would shrink our trade deficit, which would cause more of the torrid domestic demand back into the domestic market, which would really heat up inflationary pressures, which would cause serious Fed tightening and higher US rates.
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