Hey Popeye, thought this was interesting. It was written by Chuck Butler today, and it may help explain why the dollar gained strength seemingly out of nowhere:
"OK... When the dollar made huge strides at the end of July and beginning of August, my colleague and longtime friend Chris Gaffney pfilled in for me with the Pfennig, and wrote that he believed the dollar's reversal to be central bank intervention... We received a few emails from people asking us to follow up on that thought, but we couldn't... Until now!
The Bloomie is reporting this morning that "finance officials from the U.S., Japan and Europe in mid-March drew up plans to strengthen the dollar following troubles at Bear Stearns." The story, which originally appeared in Nikkei English News, went on to report that "the intervention designed by the U.S. Treasury Dept. Japan's Finance Ministry and the European Central Bank called for the central banks to purchase dollars and sell euros and yen, with Japan providing the yen needed for the currency swap if the greenback's value dropped significantly.
The three groups, which considered making an emergency statement through G-7, did not stipulate a specific exchange rate for the potential intervention, nor did they detail the amount of money to be used.
So... Now we know! There was no way the dollar turned on a dime like that without something like this happening... The fundamentals are so anti-dollar strength, and yet the dollar was gaining strength... Well, we know that the Bank of Japan has a treasure chest of yen that they have collected over the years... And they have an even bigger treasure chest of dollars (most of it held in dollar-denominated Treasuries), but now they have even more dollars! I bet they are just happy as pigs in slop to own all these dollars!"
Here's the link to the article as well if you're interested:
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