No one questions why the dollar is set to raise.
By Daniel at 6 December, 2009, 11:35 pm
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Suffice to say as the dollar rises any attempt to increase interest rates will multiply the effects of a strong dollar.The fed cannot lower interest rates so if the dollar takes off with a lot of velocity the effects had better be good and not bad because the fed is all out of bullets.
As investors sell off gold a demand for dollars is created.
As Japan sells U.S. Bonds ( to weaken their currency)Demand for U.S. Dollars increases.
As investors in Equities see a rising dollar they begin to panic and sell…This creates a demand for dollars.
As central banks sense panic in the financial markets they buy U.S. dollars or bonds for a flight to safety. This creates demand for dollars.
As producers of commodities try to maximize profits by selling all inventories in an up market- this creates demand for dollars.
We could very well be standing on the precipice of a cliff walking blindly in a snowstorm.The only difference is the fed has taken away the safety net!
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