Dollar Bull

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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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Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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