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Anyone know what's causing this ? The dollar should be falling still and the yen is hardly out of the doldrums itself.

Is it just market CW based on smoke and nonsense, are they over-exagerrating germany's issues or is there something else again causing this ?

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Mon Dec 1st, 2008 at 06:23:59 AM EST
[ Parent ]
Here are two possible and very approximate explanations:

  1. Investors of all stripes know what's good for them and trust the economies of the US and Japan to deliver over the coming years, and their governments therefore to be able to raise taxes and pay off debt, or

  2. Investors of all stripes are busy selling off assets and unwinding international positions that are written in US$ or, for the yen, see carry trade, and this creates demand for these two currencies.

Any and all other explanations welcome.
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Dec 1st, 2008 at 09:33:27 AM EST
[ Parent ]
Oh, and

3) Everybody knows the ECB is about to bring interest rates down, and "markets are anticipating".

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Dec 1st, 2008 at 09:38:10 AM EST
[ Parent ]
And here's Ambrose Evans-Pritchard:

4) World stability hangs by a thread as economies continue to unravel - Telegraph

Investors are retreating into 3-month US Treasury bills - the ultimate safe-haven. The yield has fallen to 0.02pc, less than zero after costs. You pay Washington to guard your money.

(Read the whole article, go on)

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Dec 1st, 2008 at 09:51:39 AM EST
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It's an interesting article, even if I disagree with practically all of his conclusions.

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Mon Dec 1st, 2008 at 10:02:41 AM EST
[ Parent ]
Last but not least:

5) Europe.Is.Doomed

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Dec 1st, 2008 at 09:55:12 AM EST
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6. Money people are conservative. They keep repeating the same mistakes until something explodes.
by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Dec 1st, 2008 at 11:52:22 AM EST
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I have seen a few people advance the #2 scenario...and that as soon as the market is wrung dry of anything that might give a profit (or less of a loss), then that is it for the dollar, in a free-fall kinda way.

It makes sense to me.

Never underestimate their intelligence, always underestimate their knowledge.

Frank Delaney ~ Ireland

by siegestate (siegestate or beyondwarispeace.com) on Mon Dec 1st, 2008 at 02:43:42 PM EST
[ Parent ]

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