Last night I saw an image of a wounded bull, bleeding between the shoulder blades, and taunted by a matador with a sword. Then, instead of doing what he was expected to do (stare his executioner in the eye and die), the bull charged into the crowd, scattering the blood-thirsty spectators.
Of course, the bull died anyway. But not without a fight.
That's what this chart below tells me about the dollar in 2007. The buck is going to rally. The alternative is its immediate destruction as the world's reserve currency, and as I show here and here (and with a great chart here) the dollar is too important to global liquidity right now to simply disappear overnight.
It will take a lot of creeping inflation...and the bursting of the derivatives bubble before demand for the dollar falls. And with U.S. interest rates set to stay high from an inflation-fearing Fed, the bloodied buck may still have some stuff to strut, at least for awhile
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About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). He began his financial publishing career in 1997 and has covered financial markets form Baltimore, Paris, London and, beginning in 2005 Melbourne. He’s the editor of The Daily Reckoning Australia and the Publisher of Port Phillip Publishing.
