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

To: Moominoid who wrote (4328)	8/3/2001 12:07:24 PM
From: Raymond Duray	Read Replies (1) \| Respond to of 33421

Hi David, Since capital generally flows to the currency with the most attractive fundamentals (stability, interest rates, etc.) I'm just not seeing the yen or the euro as being particularly more attractive than the dollar at this point in time. That to me would be the crux to get the exchange rates to move. IMHO, Greenspan has a bit of ammunition left, he'll most likely take the Fed Funds rate down to 3% while continuing to push on the liquidity side via the discount window. Re: And Greenspan looks likely to cut interest rates again.... So this continues to support a big external deficit and pressure to lower the dollar. Up till now the capital flow kept this mechanism from returning things to equilibrium. I'm curious as to how you would define equilibrium? Simplistically, I can see Yen/USD at 100:1 and Euro/USD at 1:1 having some mathematical elegance as a parity point. But that isn't even close to a useful way to view these markets. Any further comments welcomed. Best, Ray :)