Monday April 4, 2005 - 10:19:05 GMT
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Black Swan Capital - www.blackswantrading.com
$ view unchanged
“History is a collection of agreed upon lies.’”
The news that US inflation is gathering momentum only validates our ongoing view the Fed is running behind the interest rate curve regardless of how you slice or dice the ongoing reports (it lays the ground work for a 50-basis point hike to catch up). We are not yet buying into the argument the Fed can’t afford to be aggressive given the global financial backdrop. As pointed out in Currency Currents on Friday, there is a strong counter view which says the Fed can’t afford to blow any more air into the asset bubbles it has already created.
Our story hasn’t changed: 1) rising yield differential and 2) relative strong growth support the buck over the intermediate-term.
Chart: Dollar Index Weekly
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