Continuing Cracks - Part 3

"The dollar is falling like a wall that comes crumbling down after standing strong for a long period of time... I checked the markets all day yesterday and early evening... It seemed that with the U.S. on holiday, the currency markets were going to be a non-event... But then overnight, there came word that South Korea's central bank, which at first glance you would think "so what", but on second glance would notice that it too has been building dollar reserves to the tune of over $200 Billion, announced that it plans to "diversify its reserves"... WOW! What a shot across the dollar bulls' bows!

The Bank of Korea story has pushed the euro to 1.3220... That's right, 1.3220... Why would this really have this kind of effect? Well... It's a built up thing... You see, I've long told you that one day central banks would look at their balance sheet and freak out... Sweating bullets... Tremble and shake, at all the dollars they own... And at that time they would make a decision to "diversify" their holdings... Well, these thoughts have been present in the minds of traders for some time now, and with the Bank of Korea making this announcement, all those thoughts come to the forefront of traders' minds... And the walls, come crumbling down...

In the last two months we've had The Bank of Russia and now the Bank of Korea both make diversification announcements... "Now support for the dollar will begin to disappear quickly", said Daiwa's head of overseas debt... I agree, and just look at the results in the markets if you need proof!"