8/8/2008
The dollar rallied strongly today, breaking key levels versus the euro, the pound, etc, etc. According to market commentators this was due to the ECB's acknowledgement that the global slow down had spread to europe and asia. However, I think this is a delayed response to the fall in oil. Europe is less energy instensive and so will do relatively worse with a lower oil price visa vie the us. In addition a lower oil price means less petro-chemical dollars flowing into Europe.
The funny thing about this is that the oil price has been falling for a while now and I should have seen this move. Trading tip - follow the money, what are the asset allocation consequences of big asset price moves?