Posted by: jhamon | August 10, 2009

Why The US Dollar Rally? What It Might Mean…

Writes MysteryHedgie, that macro man on the Right Coast:

Questions have been asked of us as to the meaning of the US$ rally in a firm equity tape…Our intepretation is that the payroll figures show the US economy   to be “less worse” than forecast relative to the developed world.  What may have been overlooked is the strength of the Brazilian Real and the Mexican  Peso (see below) on Friday.  First message is that Mexico is the biggest beneficiary of improving US conditions.  Second message is that performance of EM, not G7, is becoming the tail that wags the dog of global asset price movements.  To that end, it should not surprise that upside momentum is stalling in  stocks (NDX especially) and commodities…Chinese stocks have been in a volatile range for a month;  breakout in SHASHR up or down wags the tail end of August’s dog days….      

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