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So far in 2008, the dollar has managed an impressive rally that regained the uber-important 80 level. This rally has recently begun to fizzle, however, setting up another test of this key support.

If it breaks down, it suggests we should see a resumption of inflation: yippeee! If it holds 80 and resumes the rally it began this year, it tells me deflation may only be just beginning to take hold: yowsers.

Either way, I’ll be watching like a hawk.

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