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Strategies & Market Trends : The coming US dollar crisis
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To: Wyätt Gwyön who wrote (24177)11/11/2009 2:17:03 PM
From: Real Man1 Recommendation  Read Replies (3) of 71463
 
The key reason for the USD bounce in 2008 was the spreading of
US recession to the globe. Initially as the market dropped in
2007, so did the dollar, as the Fed lowered rates. Now that
the globe is recovering, while US is lagging, the dollar is
getting sold. This lagging is not bullish for US equities.
I am personally of the opinion that now popular
"the dropping dollar = risk trade " is simply wrong. It worked
in 2008, but not in any other year. It is true that the carry
trade is now borrowing in dollars. It only makes sense.
The economic outlook is better elsewhere, so the US dollar will
continue to drop, and if there is a second dip not followed
by the globe, the dollar will indeed do quite poorly as the
international capital exits USA and goes elsewhere, where
there is real growth. As ZIRP is being kept forever, the dollar
will continue to weaken, perhaps, substantially.
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