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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (4169)	6/26/2001 3:42:32 PM
From: John Pitera	Respond to of 33421

No question that is a significant part of it, If the DEM were still a free standing currency, I think it would be higher than it is currently. Briefing to day points out that the US slowdown is exporting the contagion overseas and that is helping to equalize the the USD out of significant weakness, as our trading partners are dealing with the same slowdown, and they also have other problems which we've noted here in the Lab. While we already focused on the uncertainty surrounding the Fed in the Treasury market, we would note that a similar trend seems to be playing out in the foreign exchange market. Over the last few days, the market has been largely characterized by a bout of dollar weakness. While this dynamic is not particularly surprising when considering the heightened expectations for a more aggressive 50 bp rate cut, we would note that with the breakdown in commodities and the sluggishness in global equities, there has been little reflationary momentum behind the dollar's recent pullback. In other words, we are again forced to come back to some semblance of deterioration in the perception of the Fed's ability to foster any significant near-term recovery. The problem however, is that it is unlikely that such a scenario will be able to wreak much havoc on the dollar. Globalization has allowed US contagion to deepen overseas, leaving the dollar to take advantage of the dismal sentiment surrounding its peers.