Even when the EUR/USD and AUD/USD were falling sharply yesterday afternoon, USD/Asia had a lot of trouble bouncing. This implies that there is more downside in USD/Asia to come, which means more intervention, which in turn means more demand on dips for EUR/USD and AUD/USD from ACBs.
Mr Geithner may think that the USD is still secure as the world’s reserve currency but he should be getting more than a little worried by the rate at which the traditional USD-traders in SE Asia are bailing out of the greenback.
