By Chuck Butler

There are two camps screaming their theories about today’s rate cuts in the U.K. and Eurozone. In one camp we have the old stick in the mud, "a rate cut debases the currency" crowd. (By the way, I’m on board with that crowd about 90% of the time.)

In the other camp we have the risk-taking "a rate cut will allow the Eurozone to shorten the recession and will be good for the euro" crowd.

Hmmm… You know, I've seen this kind of perverse way of thinking about rate cuts before. I saw it back in 2000 and 2001. At the time, the world’s economies were recovering after the brief U.S. recession.

The recession itself was short-lived because the Fed-Heads at the time stuck their hands in the cookie jar and acted like they knew what they were doing. They slashed rates and provided enough liquidity to choke the proverbial horse!

You know, I don't think I can ever mention the last U.S. recession without going on that tirade about the Fed. But anyway, I was saying at the time the currency markets were rewarding any currency with a rate-cutting central bank. The Forex market was pricing in that these central banks were cutting to spur economic growth.

It was the first time I had ever seen that, and I remember my editor of the Review & Focus thought I had "lost it" when I wrote about cutting rates being good for a currency. Strange, but it does happen from time to time.

The euro isn't the only currency to get whacked by the trading theme yesterday. The Australian dollar was looking perky at 70-cents before falling back to .6750. The Canadian dollar was pushing the envelope on 87-cents only to see their fortunes fade to .8540.

And if you need more proof that this trading theme is still in play, just look at the only two currencies that gained yesterday: Dollars and Japanese yen!