Is the Chairman spending too much time in Basel? It almost seems that he’s falling back to his Ayn Rand roots. Maybe Alan is going to change his name to "Our Crowd." Maybe Alan is part of "Our Crowd?" Maybe I am related to Alan?
His ambush of the dollar has six points, all uttered by his own lips.
1. He said, "Anyone who has not appropriately hedged his position by now is obviously desirous of losing money." That can only mean that the U.S. dollar is going much lower, in my opinion.
2. He warned that the state of the U.S. Current Deficit was "increasingly less tenable." He warned of fresh falls in the U.S. dollar.
3. He said that foreign investors would eventually reach the limit of their desire to finance U.S. deficits.
4. He said that the U.S. dollar was going to bear much of the brunt of adjusting a Current Account deficit, now 5% of GDP. In English, this means the dollar is going a lot lower, in my opinion.
5. He said the falling dollar would cause increasing interest rates.
6. He played down the effectiveness of central bank interventions in currencies in order to attempt to change the trends.
How long have you been reading these six points here? Since 2000 is the answer. Now why in the world did the St. Louis Fed publish an article about 15 months ago, saying that the growth of the U.S. Current Account was basically meaningless. Why did the U.S. Secretary of the Treasury embarrass himself Friday by saying the U.S. Current Account Deficit had to be a shared problem of other nations, at the same time that Alan was dropping a smart bomb on the U.S. dollar?
.8197 of USDX, which is the 1995 low, might give some support, but as a short-cover place only. But after a small rally in the normal pull-back toward the last neckline break, all heck will break loose in the dollar, and all the King's men and ladies will not be able to put Humpty Dumpty Dollar together again.
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