Yield Shoots, Dollar Leaves

I've lost count on how many times I have read that the Dollar has weakened on rising inflation expectations yet where foreign currencies are concerned they seem to strengthen when such expectations apply to their country . The strengthening of the NOK today is a case in point .

Without going into too much detail can someone enlighten me on this ?

ashraf.

i am in the process of looking into this.

will update once i have come up with a plan.

I think majors will trade tightly during the summer as vix is unlikely to rise and stocks likely to hold on to recent gains until fall. from there onwards we can expect dollar and euro to gain from equity pull backs as interest rate climate tightens. I would target september for bigger moves in the majors and to the benefit of the dollar. we are in a very long W recession and I do not believe we will get a W like great depression as monetary system and banking is so much more different now.

The US government bond market is the key market to watch outfor. future interest rates and inflation will dominate investment decisions and pyschology going forward.

the market remains highly uncertain going forward but it is logical to discount panic equity selling in near term.

The reason why this recession will be long is that as soon as housing picks up in uk/us interest rates should rise sharply and this will cause the downards pressure on house prices again. so markets are enjoying interest rate subsidies by the central banks for now. but i expect over the next couple of years mortgage rates to rise sharply which will severely lessen the likelyhood of a sustained recovery.

serious inflation is not a near term risk as too many weak fundamentals. dollar collapse would spark commodity linked inflation.we are more likely to get inflation once unemployment bottoms out and excesses in inventories become a thing of the past.

contrary to what people think, us gov rising bond yields will attract flows into the US dollar and restrict stock advances.

i cant see a panic sell of in stocks this year more likely a pull back if yields start rising sharply.

i dont see huge swings between major pairs for the remaining year.