How did the Bible get it so right that the battle of Armageddon would take place in the middle east? They didn't know most of the world's oil was located there.
The falling US Dollar Index will surprise everyone as it resumes its course down, after it reaches 80 or 85, then break down to new lows I am sure. Time and again the Euro will prove itself as the global currency which hurts European exports, but it is not so much the Euro rising as the US dollar falling against most currencies, but still unable to balance its trade deficit. The monthly trade deficit is still over 60 billion dollars.
I think expectations are priced already for a slowing Europe and that rate hikes have stopped, so we should see a new Dollar low by October, and Morgan Stanley has the same sentiment. Interest rates are too low in US and inflation is too high compared to Europe.
Negative real rates are a killer for a currency. Interest rates swap indicate the Euro/Dollar is should be at 1.54, not the current 1.49. All the shorts unwound in the last couple of weeks so positions are flat again. And in the futures markets, commercials are getting to be as short as they ever were.
It's just a matter of time before gold goes over $1000 and the Dollar resumes its down course.
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