Forex market bursts to life as dollar cracks

[Renew Deal]

Fri Oct 22,12:05 PM ET

By Steve Johnson

After months of relative torpor the currency market burst into life this week as the pressures building on the US dollar finally forced the greenback to crack.

The dollar spiralled out of the tight trading range of $1.18 to $1.25 against the euro that had prevailed since March, ending the week 1.2 per cent weaker at $1.2630, not far from February's seven-year low of $1.2930. The greenback slumped to similar lows against a broad basket of currencies, registering an eight-month low in trade-weighted terms.

The dollar's decline was kickstarted by soft economic data, but soon deviated from the fundamentals as the market began to worry about the repercussions of oil prices staying higher for longer than expected.

High oil prices will reduce growth across the globe, with some studies suggesting the eurozone is actually more vulnerable to this threat than the US.
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http://story.news.yahoo.com/news?tmpl=story&cid=1106&ncid=1106&e=2&u=/ft/20041022/bs_ft/7e106a64240811d9a11000000e2511c8

This is some wild stuff. Watch the play by play from TrogL. It's scary. There are also some more thoughts on the bottom of that thread.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=923873&mesg_id=924344&page=