Friday, August 15, 2008
The U.S. multiyear downtrend is over. The process we described as “carving out a bottom” has been completed.
Recent days have been a watershed, but it has been a long time in the making. The dollar bottomed against the British pound and Canadian dollar (half of the G7 currencies) last November, as the Federal Reserve expanded its lending facilities and these countries prepared to cut rates. The dollar bottomed against the Japanese yen and the Swiss franc in late March, around the time that the Fed made a stand to protect what it perceived to be a potential systemic risk in the demise of Bears Stearns. The dollar recorded its low against the euro in early July, as the U.S. Treasury and Fed made it clear that a failure of government-sponsored agencies