Today's action was plain and simple a result of the dollar rally. The question is, what caused the rally. When the dollar is stronger, it devalues assets denominated in dollars. so there is an inverse relationship. Stocks are as high as they are because of the weak dollar.

First of all it was short covering, but what was the initial impulse that set off the firestorm?

My theory is central bank intervention. Perhaps it is our own Federal Reserve which is buying up dollars. With all the talk about the US Dollar losing it's status as reserve currency for other nations, it would be in the Fed's interest to try to put an end to the dollar's downward spiral. I'm sure they have the authority to buy dollars as needed. They could support the value of the dollar by raising interest rates, but because of the recession that option is off the table.

I'm not a currency expert and my theory is just that, a theory, but I would like to get a dialog started among those who are more qualified than me to discuss the possibilities.