Thursday May 19, 2005 - 11:05:46 GMT
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Black Swan Capital - www.blackswantrading.com
“All newspaper and journalistic activity is an intellectual brothel from which there is no retreat.”
You have to admit, the dollar is reacting well to the news. So far this week we’ve seen US economic data disappoint—on growth and inflation. More talk again of a slowdown and whispers of a Fed that has gone too far on interest rates.
We have news that China’s efforts to cool growth have failed—which suggest commodities might be oversold, along with the comdols (Aussie, C$, and NZ$). Copper rallied yesterday—Aussie followed:
CHART: Aussie vs Copper
This “failure” to slow hot money investment/speculation into China (notice the Hong Kong Monetary Authority announcement in the key news above) may add some urgency to “do the revaluation” and get it out of the way—this is supposed to be dollar negative. Add to the mix the on-again, off-again rumor the Bank of Korea will stop intervening in the market, and you have a fertile background for a correction in the buck. It seemed to begin yesterday. But was it a one day wonder? I will answer that tomorrow.
Black Swan Capital
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