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If you can't understand dollar strength, here's a clue
Many cannot figure out how the dollar can rally amid a rapidly slowing economy and and a historic credit crunch. Here is a strong hint: capital is flowing out of overseas and emerging markets and back into the US as the decoupling theory (the idea that the US and emerging markets had become delinked) proved to be deeply flawed. Reuters is running a headline saying the MSCI LatAm index is down 10% today alone. similar moves have been seen in Asia while the associated commodities bubble continues to leak. All these trades were predicated on an ever-weaker dollar. A years-long trend is being unwound in months; we are only on about month-three of the reversal. It could still have quite a way to run. A sustained break below 1.3665 is of monumental importance near-term.
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