A student emailed in and asked:
Hey Michael – I was just curious, why did the $DXY take such a dive yesterday? I’m still trying to keep straight what moves with/leads/follows what.
The $DXY is the dollar index. Basically, an average price of the dollar versus many major currencies, not just the euro, pound, etc. It’s just another way of looking at the dollar, but broader. Here was my reply, so here’s a heads up on the buck this morning:
The big one was that a Chinese politician said some USD negative comments last night. They were to the effect that China needs to get the heck out of the dollar.
Also I think I read somewhere that the Fed’s Lacker was more dovish in the last voting than people anticipated, a ratings agency downgraded U.S. bond insurers which causes a fresh wave of financial panic and there was a news article today that said George Soros (famous money manager) and Alan Greenspan said that the U.S. is in a worse position that the Fed will admit.
To read more of this story of the dollar debacle, the latest in a series and of more to come, read here. That sweet tinder smell you smell is the dollar going up in smoke.
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