The dollar fell sharply today as Congress prepares to shove through some form of tax cut legislation that will add another $900 billion in Ponzi spending to our deficit:
Gold and oil were also up sharply on the dollar move. The move in commodities was also fueled by China's decision to not raise rates over the weekend.
Stocks were up slightly which isn't a surprise when you look at the dollar. If/when the tax vote gets done it will be interesting to see how treasuries react. Bonds are down once again in early trading this morning.
What I find interesting here is the fact that the dollar sold off despite the fact that the Chinese failed to hike interest rates rates. You would have thought this would have strengthened the USD. You would also think the dollar would rise as the European debt crisis continues to intensify.
This tells me that perhaps the debt hawks and currency traders are focusing more on out deficit and future government spending.
I expect some fireworks on approval of the tax bill because any deal that's made to juice it up for the Democrats in order to get it through will do nothing to help our deficit. If anything it will likely be filled with more pork that will make things worse.
The Fed is playing with fire and our dollar is it risk. Treasuries have continued selling off as I write this post. Keep an eye on bonds.