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Politics : Idea Of The Day
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To: GROUND ZERO™ who wrote (31704)6/4/2000 5:48:00 PM
From: Shtirlitz  Read Replies (1) of 50167
 
Here is what I understand regarding the situation with the sliding dollar.

There are 3 major factors weighing on it:

1. Perception of a slowdown in the US economy.

2. Due to the acceleration of economy growth in Europe on one hand, and recent fall in Euro on the other hand, ECB is being forced to raise interest rates, to avoid domestic and imported inflation. ECB decision is coming out on Thursday this week. Rise in European interest rates will further strengthen Euro against the dollar.

3. Continuing recovery of the Japan's economy strengthens yen's positions.

The slide in dollar is dangerous, since with the huge US trade deficit it may cause fears about imported inflation and prompt Fed to hike rates further. And frankly I'm not seeing any catalysts that may strengthen the dollar at this moment.

I'm starting to get a feeling that fundamentaly this market is trapped. Only greed, euphoria and ignorance may move it to the upside. These are very powerful factors, but I would avoid betting on them right now.
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