Misreading the signals

While economic doom and gloom, geopolitical tension, stock market erosion and flight to quality keep euro/dollar paralysed, expectations that a growing current account deficit in the US would put the dollar under persistent pressure have failed to materialise. Why is it that record trade deficits in June and July failed to hurt the dollar? Have capital flows turned more positive for the greenback lately? Or has the economic slowdown reduced the importance of the matter?

Fears that the US

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