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John Bollinger's Long Term Outlook on the Dollar
August 2010
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Here we find the risk-aversion trade in full force, with
the darling being the Japanese yen. One reason is that
they maintain a large current account surplus. On my
way back from China we stopped for a day in the Japanese
town of Narita, a lovely town with a beautiful temple
complex. However things were insanely expensive,
with the yen around 85 per dollar. It seems that in the
modern madness that has become the foreign-exchange
markets, the concepts of interest-rate differentials and
purchasing-power parity have become moot. The rational
investor would expect these concepts to reassert
themselves, perhaps with a vengeance at some point, but
there is little sign of that now.
Yen ETF - FXY - Daily - One Year (The risk-aversion trade at work.)
John Bollinger, CFA, CMT
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