It's almost unimaginable: Tiny Greece coming to the rescue of the mighty U.S. dollar.
Yet this could be exactly what is about to happen, albeit inadvertently. Greece's deepening debt crisis chased investors out of the euro in favour of the greenback Thursday - and we may be seeing just the tip of the iceberg. Investors may be about to return to the battered-and-bruised U.S. currency as they flee an even uglier situation developing in the euro countries.
Market analyst and newsletter publisher Dennis Gartman wrote in his Thursday Gartman Letter that a move among forex traders out of the euro and into other currencies, including both the Canadian and U.S. dollar, "may become far more serious far more swiftly than many - or indeed nearly any - of us believe possible."
First off, he said, the euro will come under substantial pressure if it slips below $1.43 (U.S.), a key technical support level for traders. (It was barely above that, at $1.4323, in late-Thursday trading.) Should that support level fall, "we fear that a rather sizeable torrent of technical selling shall be unleashed that shall drive the euro rather swiftly toward $1.37 in the course of only a few weeks."
Underpinning such a selloff is a potential domino effect of debt troubles among EU members, he said.
"Greece is the first to show how severe these strains can be. Portugal, Spain, Ireland,Poland et al are following," he wrote. "As these problems become more severe, not less, the pressure upon the euro shall follow and the position of the euro as the supposed second reservable currency shall be tested - probably quite severely - over the course of the next several months."