Reply #44: Those last 4 paragraphs say it all...

[54anickel]

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The dollar has stabilized at slightly firmer levels in the past few sessions in a move most currency traders said was position-squaring ahead of year's end.

But the currency market continues to focus on the sustainability of record U.S. trade and budget deficits and whether an orderly reversal of these gaps is plausible without upsetting the global economy. :eyes: Sure thing, world - all * talks about is borrowing even more and making tax cuts permanent.

The market also remains convinced the Bush administration will do little to stand in the way of a depreciating U.S. currency, even as officials pledge their support for a "strong" dollar.

Brighter economic data could fuel expectations for rising U.S. interest rates. If higher rates draw foreign capital into the United States, that could help finance the deficits, at least in the short term.