In the last post we talked about the strengthening in the USD on the basis of interest rates. We suspect the Fed is simply talking up rates and the USD to satisfy the Asian central banks who are getting no interest from their treasuries. The US government of course has to placate these countries because it borrows so much money from them.
Nevertheless in the short term, I'd be looking for US economic weakness to drive the Euro (like the Yen) to the July 2008 high against the USD. We can see in the following chart that the Euro has to rise by another 10% before it reaches that point.
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Andrew Sheldon
www.sheldonthinks.com
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