Thorburn, the rise in the USD over recent months could be viewed as a stealth move to safety by big money, but also a sign of underlying deflation. The dollar is currently overbought on extreme sentiment so a pullback is due. But longer term I'm very bullish the USD.
A rush from risk assets to the relative safety of the USD would result in a severe contraction of liquidity that would force debtors scrambling for dollars to pay back USD denominated debt. We experienced this in 2008 and the looming debt deflation should be even more intense.
