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Mar 05, 2004 2:49 am		USD / Euro
Melanie Hollands		There's some really interesting stuff going on with the US dollar. In particular, an interesting development looks like its about to unfold in the USD / Euro. Easy Al (Greenspan) was harping all last week that a weaker dollar is good for the US so long as depreciation has been gradual. Now, in hindsight he probably had good information in advance on market positioning and, hence the washout in the Euro/USD over the past week. Greenspan was trying to stall the dollar bounce from happening. Now, think of what happens as an end result: even if there are equity inflows into the US, a stronger dollar means that Asian central banks won't need to be buying as much dollars to support the USD. Therefore, they need to buy less treasuries; which, in turn, means that interest rates will rise in the bond markets. That is defintiely something Easy Al doesn't want right now. See the irony? The scenario I just sketched out is a real possibility, so Easy Al and his gang can't afford to let it unfold. I would expect Snow & Co. and Easy Al to comment more on the dollar in the next week or two. Rememebr, Al has NEVER commented on forex prior to last week. In fact, he took pains to remind questioners that FX policy belonged to Treasury and wasn't the domain of the Fed. As I said above, interesting developments on a more macro scale that the deal folks at the Fed need to keep under control. Cheers Melanie Hollands President Koala Capital, LLC Private Reply to Melanie Hollands (new win)

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