a natural "flight" response to something that is going to explode.. in case some don't get it..I am referring to the credit/stock market/housing bubble.. I read that when the Sun dies, it will first expand a 100 times then explode, then shink to a white dwarf...may be that what we are seening on the economy/stock market today.
some of it has to do with interest rate spreads esp. against the AUD and GBP. the fact that we have such a high deficit is also (aka the twin deficits) are playing a large part. at this point, economic growth is the US is not helping the dollar as investors feel that the growth is coming from low interest rates and fiscal spending (tax cuts). there was a great article in the WSJ about the dollar's current behavior a few weeks ago, i'll see if i can find it to let you guys know the dates
The equities market continues to climb and the dollar falls... What would stop the fall of the dollar? A FOMC rate increase or some sort of international panic? In some sort of panic, maybe the Euro would be a better safe haven than the dollar? What happens to the Dollar if we have a correction/pullback in the market? ramora
ECB (European Central Bank): Review of the international role of the Euro (December 2003) http://www.ecb.int/pub/pdf/euro-international-role2003.pdf