Look out for stocks.....

The U.S. stock market traded lower yesterday. Keep an eye on the Emerging Market Stock markets. WHEN they come under pressure the Dollar WILL do better against their currency. A great deal of the dollars weakness over the last year or so has been attributed to interest rate differentials. This is changing. Also the purchasing of currency to buy foreign stocks has been a consistent theme. WHEN their stocks come under pressure fund manager's will run for the exit. Unfortunately that exit is small and it will be crowded. Tonight is the Australian interest rate decision. I am expecting 25 basis pts. I will be short Aud/Usd as I think they are coming close to an end to their higher rate cycle. See below story for more flavor.

http://www.iht.com/articles/2005/02/28/business/gfcolumn.html