Archived IMT (2009.10.15)

USD DAMAGE accelerates against AUD and CAD after the FOMC minutes show the Feds puzzlement in the face of falling bond yields. Some members explained falling yields due to reduced concerns about inflation, while others saw it a result of excess reserve balances was putting downward pressures on yields. The Feds situation is growing extremely unsustainable: In order for it to contain the plunge in yields and the rapid fall in the dollar, all it can do is manage inflation expectations (translation: telling bond traders it wont be increasing liquidity for ever via stating the obvious we will raise rates when the time is right. EXPECT MORE HAWKISH LANGUAGE from the Fed in coming days such as referring to reverse repos (way to reduce liquidity) as USD Index nears 75.18-- the 76.4% retracement of the rise from the March 2008 lows to the March 2008 highs. EURCAD renews declines in line w/ latest HOTCHART.