Wednesday, December 27, 2006
The Dollar Conundrum
With the Dow passing and closing above 12,500 for the first time stocks remain all the rage - the dollar? Who gives a ... well, never mind. The dollar got a reprieve from the new home sales which the market interpreted as being better than expected, but before the data came out, things weren't looking so happy for the dollar on word that the UAE decided that it will be diversifying some if its reserves away from the buck (Click Here). There was that flurry of angst over the dollar around Thanksgiving, but that's all largely been forgotten as the blue chips rage higher like the Colorado River used to before they dammed it up. Since the U.S. current account deficit requires a 'round the clock need from every central bank around the globe to continuously buy dollar based financial instruments, today's hardly noticed UAE story may have been the most important piece of news of the day.