The predominate currency trade for the last good many years has been to bet against the US Dollar, but I ask if that might be changing now. There was an interesting blip on the radar screen lately as the Euro lost one-percent against the dollar, which did happen in one-day. New trend or non-sequitur, well I think there is a little bit more to it than a once off.
There was a particularly scary article in Reuters recently that could cause a huge calamity in the global currency markets. And it made me reconsider my outlook on both the short-term and long-term stability of the Euro-Zone, and the EURO currency itself. The article was titled "Germany MP Says Berlin Should Help Greece Leave Euro" by Christiaan Hetzner and Gernot Heller published on May 7, 2011. The teaser paragraph stated; "BERLIN (Reuters) - Germany should constructively support any efforts by Greece to abandon the euro and return to the drachma, a leading MP in Germany's junior coalition Free Democrats (FDP) said on Saturday."
That is a troubling situation just as Portugal secures a $116 billion dollar bailout from the IMF and EU. As you know the PIIGS, Portugal, Ireland, Italy, Greece, and Spain have had a huge challenge reeling in their debt, and runaway expenses as those EU nations moved very quickly towards a socialistic governmental structure at a time when their aging population was already causing a big stress. After the global economic crisis, there was no way they could cover those accelerated costs, legacy obligations, and on-going expenses, while servicing those growing debt loads.
Many believed after the financial crisis that there would be a round-two bailout needed, but other nations are not so quick to come to the aid of the PIIGS due to their own financial situations.
Interestingly enough, as I was preparing this article, I found two more very telling pieces in the WSJ on this topic on Saturday-Sunday Issue May 7, 2011; (1) "Euro Plummets on Greece Report" by Stephen L. Bernard (Currency Trading Section) - a little over 1% on Friday-Saturday's news, and; (2) "Report on Greece Sparks Demand in U.S. Treasuries" by Min Zeng - which stated; "Worries about the recovery, fueled by sour economic data, have eclipsed fears about inflation, a main threat to bonds' value."
Now then, it would appear to me maybe it's the Euro which is in trouble, and not the dollar. And maybe all this Euro-Zone Bailout has failed, and merely put off the inevitable. Indeed, I hope you will please consider all this and think on it.