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The USD is app. 25% undervalued compared to a basket of world currencies - correcting for relative size. The USD is strengthening because the FED more actively tries to stimulate the economy, whereas the European central bank exclusively is focusing on inflation. This indicates that US will be the safest medium term investment bet as recovery will go faster. This is leading investors to buy USD, selling EUR, pushing up the all mighty dollar.
FYI: The 700 bill. rescue plan “only” adds 7% to the current US deficit. The US has much bigger probs. ahead..
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