The PIIGS Are Squealing And Yet The Dollar Is Still Tanking Today...

The spread between Ireland's bonds and German bonds is blowing out again today.  I believe the bonds of Greece and Spain widened considerably yesterday.  A good chart of today's action can be found HERE (this is a decent site to keep track of FX news during the day, by the way).

Given the above, we would have expected the US dollar to firm up today, right?  Here's a 5-minute chart of the overnight action in the USDX:

(click on chart to enlarge)

As you can see, the dollar has been in "el-cliffo" mode ever since London opened and HK was winding down.  Since I've been awake today, the dollar inexplicably dropped another 400 basis points, from 77.08 to as low as 76.68. 

Not sure exactly what is occurring (yes, I know the euro broke thru 140 resistance, but this is not supported by the action in PIIGS bonds).  Given that the last time around when PIIGS paper blew out into a full-blown EU "crisis," and the dollar's response was a big rally, the action today suggests something is also "brewing" behind the scenes in the U.S.

Not good but we will know when we know what is going on...