There’ve been a couple noticeable changes since the U.S. dollar index marked its most recent all‐time low on March 17th. Traders’ and investors’ appetite has been all mixed up.

The euro continued to rally to the $1.60 mark before falling about 5% versus the buck. It’s yet to recover. And I imagine this pair is under heavy scrutiny in determining the legitimacy of the dollar’s rally.

Despite, a steady stream of subprime‐trodden earnings reports, the Japanese yen (risk thermometer) has been in corrective mode. USDJPY is still flirting with overhead resistance.

The extremely tight positive correlation between the Australian dollar and the New Zealand dollar has vanished. Once an easy tag‐team of high‐yield/high‐risk trades, the Aussie and the Kiwi have moved their separate ways.

So what’s the story? Well, perhaps traders realize it’s no longer a one way bet against the dollar anymore. And perhaps this means they’ve gotten bored with interest rates and are abandoning the “yield is all that matters” mentality.

Lately analysts have made a point to highlight some soft spots in both the New Zealand and Australian economies. But maybe since these two don’t appear to be perfect substitutes anymore, currency players, will feel they have to choose there favorite flavor and spit out the other.

Jack Crooks

Black Swan Capital LLC

http://www.blackswantrading.com/

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