For purely technical reasons, I’ll stick with the bullish forecast that has obtained here in recent months. However,the yellow flag is out, since the apparently crumbling U.S. and global economies (see Today’s Action) might warrant an announcement shortly that would jeopardize the Fed’s vaunted ‘tapeworm’ program. Sure, the very concept is a fraud to begin with, and a feeble-hearted one at that, but even now the spinmeisters are doing a tricky two-step by fostering the idea, not that the tapeworm will be reversed, but that “interest rates will be held near zero for a long-long time.” That’s the official story at this point, and there is no reason to doubt that the intent is there. Under the circumstances, the dollar’s upside potential would appear to be at least somewhat limited.
