jr, the global financial system is made up of separate but interconnected economies.
I have a short on the euro so as the EZ becomes increasingly desperate so their currency will dump and their interest rates become lower (-).
I won't touch Japan but the situation there is similar.
Perhaps the reverse applies for the US. Even now most Asian currencies are dropping which is great for exports by highly inflationary. Hedge funds head their money back to the US.
If the US economy is growing it cannot keep interest rates near zero and the FED knows there's a bottled up effect in the economy that must be relieved.
Interest rates just on 2.65% and very likely to 3% by years end.
There is of course a risk in any trade and that is of rates dropping and murdering a leveraged short but only a few weeks ago rates were at the bottom of a long rise. I think the chances of a large drop can be easily negated. If you were to buy say TBT at $60 CFD the lowest it could drop to could be ~$54 (and the FED will still be raising rates next year).
Does this all make sense or is there something here I'm not seeing?
