The $DXY crunch time...
by, 4th-August-2009 at 09:41 AM (2285 Views)
Track back to previous post on US$... as I am unable to post chart in the follow up comments.
As I was saying earlier I see 77.5 to be the real test, and the moment has arrived, if this fails then it will be 75 next and after that the previous low of of 72-73... the question that needs to be pondered is will there be any "rescue" mission kicking off at this level? With the way oil price is reacting to the declining US$, it seems the speculators have every intention of pushing it towards the recent 75 high. That will make many auto owners unhappy especially the Americans and in general the recovering economies that are dependent on oil.
Drawing a long bow, it is highly undesirable to see the US$ dropping back so low, happening almost immediately after the recent US-China summit, with Geithner's assurance of a strong US$ policy to the Chinese - the risk of facing spreading abolishment of the US$ as the preferred trading currency in the face of a runaway depreciating US$ is increasing proportionately to each downward move, with the ultimate potential of neutralising the effect of QE, putting a halt to the the US recovery - with this scenario, there's every reason for the central bankers to act, but will they? And at what level?