The dollar should go UP, but not if the Fed's are manipulating it. <<
This line of reasoning has worked well in the past--like September 2008-March 2009. It is truly amazing that people still believe the Fed as omnipotent after it failed to stop the ongoing financial crisis and has no way to stop things in the future. When you hear about QE, please just substitute "pixie dust" for "QE" and you will get the exact effect that the Fed has on anything.
But believe what you want, I suppose. Then you can blame Benron for the next dive, even though he has had little effect on anything recently. The recovery we had from march 2009 to april 2010 was largely as a result of the FASB caving in on mark to market valuation, which allowed the banks not to show the true state of their balance sheets and allowed speculators to run the shorts in financials, RE stocks and just about everything else. Industry insiders have been able to dump plenty of stock on to 401Ks and pension funds, as they know that nothing has changed, other than the fantasy accounting that they can spin to their shareholders.
When you think of manipulation, think of the remaining hedge funds and how many short US dollar positions they have built up over the last eighteen months pursuing commodities, QQQQ and some emerging markets like Thailand and Columbia. It is just another replay of the 2007-2008 speculation and where was the Fed then? Although, when you think about it another downturn in all of the above would make it so much easier to sell the debt that CONgress has spewed forth.
Maybe that is the silver lining for the Fed--fear sells treasuries. But to say any Fed operations back the market has been sadly disproved in almost every instance over the last several years. Believe it at your peril.