There used to be a time when currencies traded off interest rate differentials amongst countries and also expectations for growth. This changed in Sept ’08 through March ’09 when the US$ became a flight to safety during that time of tumult and massive capital markets deleveraging irrespective of the above factors. While one day doesn’t a trend make, the US$ today is trading off interest rate differentials and growth on the heels of the weak payroll data and continued move lower in longer term interest rates (spread between 2’s and 10’s today is the smallest since mid May).
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