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Is The Fed Being Forced To Hike Rates To Defend The Dollar?
• Zero HedgeWhen King Dollar is torpedoed like it was yesterday, stocks plummet.
So does this mean that a rate hike next week will be tremendously bullish for stocks?
The argument runs like so:
Fed tightening will shoot the $USD through the roof
Beaten-down currencies like the JPY will crumble again with respect to the Dollar
The Yen carry trade and everyone riding on it will launch equities to new highs
When the market falls off its highs in January, the Fed can then rally equities by ... adding another 25 bps.
And so on, until the correlation shifts again between USDJPY and equities.