Now what could this mean? (This is the speculative part):
First of all make no mistake: the Federal Reserve has been printing money with abandon with the express purpose of causing as much inflation as possible, despite the dismal jobs picture and slowing demand across most sectors of the economy.
This multi-month equity rally is also, IMHO, about inflating equity values as well.
If the dollar has a strong bounce from these levels, this would be a deflationary repudiation of Fed policy, and I believe this would have extremely negative implications for the entire market in the coming weeks. Metaphorically, it's hard to pump up a balloon that's full of holes!
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