Forex Investment and Currency Trading

The most liquid market right now is the market for US treasury bills. Flows into US Treasury bills are on the rise, with the yield on 3-month T-bills dropping from 3.32% at the beginning of the year to 0.48% currently. This is supporting the US dollar. It has been described as a flight to quality. We beg to differ. The US economy is running twin deficits (still), the financial sector is in a mess, debt levels for both the consumers and the government are high and the economy is heading full speed into a recession that will probably be deeper and longer than once anticipated. This can hardly be described as quality. Fundamentals have been thrown out of the window. Liquidity is at a premium. As long as this continues, and it should continue at least until half way through 2009, the USD should remain
supported. Only once sentiments calm down, the market will start refocusing on fundamentals.