Beware the U.S. Dollar's Head-Fake Rally

5/8 - "The so-called "dollar rally" is illogical, irrational and is unfolding at precisely the wrong moment - which means that many investors who are long on the dollar could get a nasty surprise if they don’t temper their enthusiasm a bit in the months to come.

Granted, there are a lot of things that happen at the wrong time when it comes to the financial markets. But the prospect of watching the dollar rise at the same time that oil and gold are advancing (a scenario that we don’t have right now, given gold’s retreat, but one that I won’t be surprised to see, given current conditions) is downright disconcerting - if for no other reason than the history books show a pronounced negative correlation over time between these assets.

Couple that concern with the reality that the Bush Administration’s policy for the dollar has been one of benign neglect and you can co...