The dollar has rebounded very quickly the past few days, and there are no roadblocks right now. The risk takers in the markets are running for safety again, sent running by China’s decision to curb lending and attempt to slow growth before their economy overheats.
You see, China was the linchpin for risk taking, because with China growing, commodities were in need, and commodity countries were very happily sending those commodities to China. The commodity countries would then be flush with cash, rising job creation, and be confident about their future… Interest rates would rise to combat inflation in the commodity countries, and the karma would be flowing for each respective currency.
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Australia and India Raise Rates
Yesterday was busy here on the desk, with the normal flurry of Monday trading combined with a number of calls to the desk regarding our MarketSafe CD which will be closing out shortly. But the currency markets were fairly quiet ahead of the elections today. But as I pointed out yesterday, trading yesterday was nothing more than the quiet before the storm, as the currency markets were rocked overnight with surprise rate announcements by both Australia and India. I warned you that this week was going to get interesting.
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