We expect the dollar to lose ground if the markets consider the latest bailout package for Greece to be sufficient. Risk reversal started last week, but we are waiting for continuation, which we think may be lacking. This leads us to believe that the markets may be in consolidation mode for sometime before another news event triggers flight to safety, in which case we anticipate the dollar to continue its longer term rally. Commodity currencies are still trading at their recent highs. We're especially mindful of the Australian Dollar as we expect that to be the biggest loser if the bottom falls out. Keep an eye on equities for signs of risk aversion.
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