By Chuck Butler

I've been around the currencies since 1985. I’ve been trading them since 1992 and I've never seen the volatility that I see every day since July in the Forex market.

For instance, I just saw the euro gap up from 1.3075 to 1.3135 in a heartbeat! Crazy! Why can't these currency traders make up their minds?

I'm not complaining – this volatility is great for grabbing quick gains. But, really, this past Monday we were looking at some devastating currency levels, and by today they have reversed about 6%!

By Chris Gaffney, CFA

The dollar moved higher yesterday as Fed Reserve Chairman Ben Bernanke urged Congress for another stimulus package. Yes, Bernanke wants to spend more of our taxpayer dollars to try to keep Wall Street afloat.

"With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Bernanke told a congressional panel.

By Jack Crooks

One of my readers recently asked about the fundamentals of South Korea and the eventual impact it might have on the South Korean won.

My simple answer: Considering the dynamics of the financial crisis, South Korea doesn’t look to be in an optimal position and their currency is very vulnerable.

More specifically, recent estimates call for slower GDP growth in South Korea. The culprit of slower growth is a struggling export market. Slumping exports are becoming commonplace.

The market is shifting gears and most don’t see the “wind of the market” changing directions. Let me tell you, when this happens, it cleans out a lot of people’s trading accounts.

Anytime you have trends in place for many years back to back, people don’t believe it when you tell them that the direction is changing. Why? Because they think that history has reinforced their view. And this is why the market “eats their lunch” during these pivotal times.

By Chuck Butler

The Japanese yen, and Chinese renminbi are the only currencies posting gains vs. the dollar. China, just back from a week of holidays, allowed the renminbi to gain vs. the dollar overnight. That's a good sign, considering the rumors circling about a slowdown in China.

But the Japanese yen is the big Kahuna moving against the dollar. Don't look now, but yen has a 103 handle! This begs the question: Is the carry trade truly dead in the water?

By Chuck Butler

Oh and did you hear? The bailout package has a clause about foreign banks. Apparently, foreign banks with bank operations in the U.S. can now transfer their toxic waste bonds to the U.S. operation, and then their U.S. branch can spoon-feed these securities to the Fed?

What? Are you kidding me? They’re force feeding us this bailout package with the "fear factor" of a recession crisis. Well guess what? We are already in a recession crisis!

By Chuck Butler

Regarding liquidity, a reader sent me a nice tally sheet of the liquidity "injections" that the Fed has made in the last two weeks. According to my reader’s tally, the total "injections" have been US$900 billion. (Some are done and some are announced.)

The reader was confused about this dollar strength... "all this liquidity and the dollar is still up, and commodities are still down...Go figure."

Martin McMahon, a Zurich-based currency strategist for Credit Suisse Group commented on the dollar's rally yesterday...