Brave New World

Geithner comments leads to temporary dollar collapse 25/03/2009

I was about to post technical targets for the main currency pairs- as per yesterday- but these have been blown out of the water by Tim Geithner who, about 30 minutes ago, made comments suggesting that suggestions for the US was “quite open” to China’s suggestion of expanding Special Drawing Rights at the IMF, essentially diluting the dollar as the world’s reserve currency. EURUSD and GBPUSD spiked up about 200 pips within a couple of minutes of the comments, which have since been clarified to the point of being withdrawn and both currency pairs have settled down but are both still 80 pips up. 

The markets are extremely nervous about the prospect of a weak dollar, honing in on any loose comments from officials, especially the US Treasury Secretary. Expect a lot of Strong Dollar talk over the next few days…..