BUZZ-COMMENT-Dollar falling because traders don't see a crisis


July 29 (Reuters) - The dollar is falling because traders don't see a crisis. That's what is so different about today's markets and those in 2008.

Myriad risks have been met with huge stimulus and lots of bad news has not led to a crisis. Instead, it's fuelled stock rallies and commodity booms.

That those rallies are flawed from their beginning is cause to fear bubbles, and bubbles burst with a resulting crisis, leading to a big dollar rise.

But that's not the situation today. Traders are being encouraged to gamble by stocks and commodities. They are betting against the dollar and in a fashion acting prudently by buying currencies perceived safe, such as the euro and yen.

That's fine if no crisis exists. In a crisis, though, the dollar as the world's reserve currency will rise. The dollar's position as a reserve currency has actually grown, not fallen. There is no real alternative.

The bigger the bet against the dollar, the greater it will rise if risk aversion results in crisis.

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(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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