Why the USD slumped after President Carter's announcement of dollar support program?
I am reading Market Wizard and I don't quite understand why USD market would slump after president's announcement of support program.
"I remember one time, during late 1978, the dollar was getting battered,
falling to new lows every day. This was during a period when I was cooperating and trading as a
colleague with Brace Kovner. We used to talk hours every day. One day, we noticed that the dollar
got mysteriously strong. There was an intense price movement that couldn't be explained by any
known information. We just bailed out of our long currency positions like crazy. That weekend,
President Carter announced a dollar support program. If we had waited until the next U.S. trading
session, we would have been annihilated."
"The currency futures markets were locked limit-down for several days in a row after that announcement. "
It doesn't make sense to me logically because, intuitively, the USD would rally if people know that government would intervene and holde USD up?
However, it seems to the author that it was common sense for the market to perceive a price slip down when the news of governmental dollar support program is out, why?
Thanks~!
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