Things are going to get interesting in early 2010. The ECB has tightened rules on the collateral banks can deposit with the ECB in exchange for cheap funding. As the crisis deepened, the ECB accepted virtually anything, as collateral. By toughening the collateral requirements, we could come into a situation where weak banks do not have the wherewithal to comply. Should a second financial crisis breakout, look for the dollar to revert to the safe-haven role it fulfilled during the second half of 2008.
This is a macro issue, so don’t look to day-trade off it. The impact will not likely be felt until early 2010.
