American economy worst in the world?? I think not.

Markets are going insane.. or are they? We have seen the US dollar rally against the Euro almost limitlessly as it has dropped 4000 points over the last few months and continues to break new highs. The equities market has insanely reversed and left hedge funds constantly disappointed. But is it really that crazy? Is it really that amazing that the US Dollar continues to rally? Why is it rallying?

Well it doesn't surprise me. You see, over the last couple of years the United has been heading towards a recession. During 2007 we watch the Euro rally extensively against the dollar. We watched the British pound dominate the market over the last few years. Why? Yes, interest rates have a lot to do with it, but realize that at this moment the US Economy has one of the lowest interest rates ever and we still may need more cuts.

We are breaking strong technical levels, but fundamentally the time was due. British and Euro economy have been extremely overbought over the last couple years and all it really took was recognition for people to wake up and smell the coffee. These moves are absolutely fundamental moves helping to push technical levels.

Also.. It is not just the United States that is in the crapper right now, it is the entire world. Did we know that rest of the world was doing so badly? No! We had no idea. Japan just recently admitted it is headed into a recession... People are always talkeing so negatively about the United States; however, it is because any time the United States has the smallest problem, we have people jumping all over it and trying to fix it. USA is still the best in the world, believe it or not. Yes we have a Federal Defecit and are constantly borrowing money from Japan, but our role in the world is so important that as soon as we start to show red, the whole world shows red also. We are the center piece of globalization and everything fails along with us.

Another huge reason the US Dollar is rallying is because the FDIC's move to insure up to 250k dollars. Why is this important? Well, earlier I said that the US is still the strongest in the world. Meaning, that even our banks have a higher chance of holding up than other country's banks. So, people from other country's are moving money into the US in order to get the 250k FDIC insurance. This along with the low volume in the Forex market combined is what pushing the dollar so far! You would be surprised, many people that generally are a miniscule part of any major move in the Forex market are now big players. We have 1/5th the volume we normally do at this time in the market.


Let's keep it real people. Just because we as Americans are quick to point out our imperfections, doesn't necessarily mean the rest of the world is perfect.

I traded London again last night. Another great night. Japanese Yen and US Dollar continue to dominate. Let's hope we continue to see this volatility till Summer comes around.