Today's USD Index

[vote4ronpauleeze]

It tanked when the bailout didn't pass? This seems a little counter intuitive to me. Were investors who were long on the dollar hoping for nearly a trillion dollars in new money?

 

[tmosley]

Irrational actions in the short term. Rational over the long term.

 

[nobody's_hero]

Doesn't the index also take into consideration the economies of other countries? I'm sure there was worldwide volatility today. I don't think it is over yet, either. Maybe it went down because the world is watching/waiting to see if we come up for air?

 

[vote4ronpauleeze]

Doesn't the index also take into consideration the economies of other countries? I'm sure there was worldwide volatility today. I don't think it is over yet, either. Maybe it went down because the world is watching/waiting to see if we come up for air?

Yeah, but I was figuring in that the index had priced in a weaker dollar relative to other currencies (under the assumption of nearly a trillion in new money). I expected a surge upward for the dollar once it became apparent that the money supply would not see such a spike.

Look at how it traded early in the session when people thought that it would pass. It was trending up in the morning.

Any traders here that can explain this?

 

[Fight-n-Mad]

I think most of the steep short term movements come from central banks and big institutions. I'm betting it will crash over the long haul as the Fed panics and throttles up the presses.

The Fed said the action is intended to "expand significantly" the cash available to financial institutions...

http://biz.yahoo.com/ap/080929/fed_credit_crisis.html

 

[Dr.3D]

The U.S. Dollar index is not totally controlled by people who invest. It also is controlled by the central banks of the countries in the basket of currencies used to calculate the index. When the central bank of any another country buys U.S. dollars, the index moves up while their own currency moves down in relation to the U.S. dollar.

 

[vote4ronpauleeze]

The U.S. Dollar index is not totally controlled by people who invest. It also is controlled by the central banks of the countries in the basket of currencies used to calculate the index. When the central bank of any another country buys U.S. dollars, the index moves up while their own currency moves down in relation to the U.S. dollar.

If that's the case, then I would question their buying strategy/timing. They bought heavily in the morning and sold off after the bill was rejected.

 

[Dr.3D]

If that's the case, then I would question their buying strategy/timing. They bought heavily in the morning and sold off after the bill was rejected.

They are tying to keep the dollar propped up. They know it is going to drop and they want to maintain a certain balance to keep their trade working.

If they can make it look like the dollar is tanking because the bail out was not passed, perhaps they can get more leverage to pass it next time.