Michael Woolfolk Time Quotations

Whereas Asian demand for US bonds is unlikely to end any time soon as a conscious policy decision, the reversal of petrodollars from the US bond market remains the greatest threat to the dollar in 2006.

The reason why an inverted yield curve need not foreshadow recession this time is that it is foreign investors and not domestic investors who are increasingly buyers of U.S. bonds.

The weekend 'No' vote was deemed to be negative for the euro and has sent the euro/dollar into a new trading range. It is quite possible that in the coming weeks we could get as low as $1.20 before the market decides that it has bought enough dollars for the time being.

Interest rate differentials are supporting the U.S. dollar for the time being. Until the Fed pauses, it looks that's going to provide support for dollar bulls.

The dollar will remain supported for the time being so long as central banks overseas continue to intervene to keep their currencies weak against the U.S. dollar.