IMPROVED ECONOMY IS A BAD SIGN FOR THE FUTURE OF THE US DOLLAR? WHAT GIVES?

The world markets considered holding dollars previously as a means to get a bigger return for their risk, SO THE DOLLAR ROSE IN VALUE AGAINST OTHER CURRENCIES. Now that the government officials keep saying that things have stabilized; that was bad news to currency traders and speculators, who sold their holdings to go into more risky currencies IN ORDER TO MAKE MONEY. The thus SOLD their dollars causing them to GO down.

GO FIGURE...BAD ECONOMY IS BAD FOR THE DOLLAR, AND GOOD ECONOMIC PREDICTIONS ARE BAD FOR THE VALUE OF THE DOLLAR!

As usual, as a currency trader you can get whip-sawed different ways for the same event!

Now there will be two events working to devalue the dollar: the significant deficits predicted for as long as we live....and the lack of potential buyers for our currency if it does not present a reason to be bought and bought, and bought.

Think about it, why would you I or the Chinese want to buy the currency if it has a low interest payment, and other currencies have a better rate?

Why would we want to on the other hand, buy a currency which others do not want to buy, since it would likely not GO UP but down if nobody is excited about it?

The dollar tumbled against the other major currencies touching a fresh low against the pound for the year and a 4-month low against the euro as signs of a resolution to the financial crisis drove investors to riskier investments.

Equities in Europe and the U.S. rose, as did oil prices, as cheered investors moved their cash into commodities and stocks, and out of dollars.

Since last summer, the dollar has tended to trade inversely to stocks, as fearful investors deserted their positions in emerging markets and commodities and jumped to the buck's "safety" lure. When stocks and oil prices trend higher, that pattern tends to reverse and dollars are dumped.

The euro jumped to $1.3782 in morning trading in New York from $1.3650 late Tuesday, peaking earlier at $1.3794, its highest price since Jan. 8. The British pound rose to a 2009 high for the second day in a row at $1.5658. It recently traded at $1.5637, up from $1.5512.

Treasury Secretary Timothy Geithner said the proposed public-private partnership to help banks get rid of their "toxic" assets would begin operations within six weeks, and he expected that financial institutions that had gotten government bailout funds would pay back $25 billion of the aid this year.

"There are important indications that our financial system is starting to heal," a release of Geithner's prepared testimony said, citing improvement in corporate bond markets, bank capital levels and the surge in mortgage refinancings.

Meanwhile, Bank of America Corp. chief executive Ken Lewis said he expects a modest return to growth in the later part of the year at a conference in London. What a genius he is, he must know something.

We have long warned about the day of reckoning for the dollar emerging at the next economic recovery, since investors will go all over to better yields."

In other trading, the dollar fell to 95.33 Japanese yen from 96.14 yen late Tuesday, despite the government saying the Japanese economy had shrunk at a record 15.2 percent pace in the first quarter. It also tumbled to 1.0979 Swiss francs from 1.1074.

Oil prices jutted more than $1.50 higher to $61.67 a barrel on the New York Mercantile Exchange, ( SINCE THE DOLLAR DECREASED IN VALUE) propelling the "commodity currencies" higher. Commodity-backed currencies are currencies whose economies are heavily affected by the prices of commodities because they are big exporters, and include Australia, Brazil and Canada, for example.

The dollar dropped to 1.1420 Canadian dollars from 1.1529 late Tuesday, slipped against the Australian dollar and tumbled more than 1 percent against the Brazilian real.

Brazil has been pushing to NOT use the dollar in global trading.