Cost Of Holding Dollars Just Went Up
by: The LFB
September 22, 2010
Complete separation in Usd-Equity trade correlations have been seen overnight as the allure of holding the Usd as a safety play was finally rejected, after running at a very high percentage link that saw Usd Up- S/P Down and vice versa.
The move to sell the dollar index down to test support at 80.00 while equity markets were also sold lower may be the first signal that the cost of holding the dollar, and the premium required to insure safety, is going up.
The FOMC rate statement offered nothing new, outside of a cynical plot to hold off announcing quantitative easing programs until the mid-term elections, but speculative interest made the decision that enough was enough and the sheer number of dollar bills in circulation now has to be accounted for.