Do you think it is time to be long on US Dollar. I think so? We are near a bottom?
Once creidt market becomes normal and started to increase interest rate to control inflation
Anything goes down badly will go up. There will be turnaround sooner than later.
Top investors not always correct.
Contrarian indicators
Too much speculation agaianst US Dollar by new comers inclusing every Harry,Dick and Tom
Some suggesting to diversify into Euro? There is no enough liquidity to meet Euro Demand.
Due to above reasons I think US Dollar will apprecaite in the future. Do you think so?
Thanks
Answers
653 points
DaveDiggz answered 8 months ago …
I disagree, I think the US dollar is going to continue to slide this year for the following reasons:
1. Under this current administration we're still actively engaged in deficit spending. The more we do that, the less valuable our paper and currency will be.
2. The Fed is run by an academic, he's learning on the job. This guy will likely cut rates a couple of more times and when that happens, the dollar goes down.
It definitely appears than the dollar is oversold, but given the current economic condition and the current policies of this country, we're going to be in for a long recovery period with respect to our currency.
264 points
MaverickInvestor answered 8 months ago …
I got this in from Profit Watch on Friday...
Capital is shifting out of the dollar and into
commodities and into emerging markets. Let’s talk about
the dollar a moment...
The buck’s under massive pressure again today, heading
towards 1.6 to the euro. It looks like this week will
see its biggest weekly fall in a month against the
euro, as traders keep on betting that the Fed will
again cut rates in the hope of averting a recession.
The greenback’s now down 8% so far against the European
currency this year.
Expect this decline to continue in the months ahead as
companies and countries around the globe keep on losing
faith. The euro already outweighs the dollar in terms
of international corporate bonds issued and more and
more emerging markets companies are looking away from
New York to Europe for new listings.
Add to that the fact that countries such as China and
those of the Middle East are moving away from the
historic dollar peg to baskets of currencies that give
the euro a prominent role, and it doesn’t look to rosy
for the American currency...
As a new report from the McKinsey Global Institute
points out, it might not be long before the once mighty
dollar loses its “global reserve currency†crown to the
euro.
In the meantime, keep an eye on the good old Swiss
franc as another great way to play the death of the
dollar, as international capital flows into a country
so far untainted by troubles in the mortgage and
derivatives markets. The Swissie has moved a euro-
thrashing 12% higher against the dollar since the start
of the year.
-----------------------------------------------
But here’s the currency that’s REALLY flying...
-----------------------------------------------
Which currency has done even better than the Swiss
franc against the dollar? Well, it’s not the Japanese
yen – that’s risen a mere 10.6% against the buck. It’s
not the resource-rich Australia at a measly 5% - and
the Canadian dollar is actually lower than its
US cousin.
How about good old gold itself... the “ultimate
currency†as it’s known amongst the real gold bugs?
Well, it’s trounced all the majors since the 1st of Jan
– up 13% at the time of writing... and that after a
recent chunky pull back from the 17 March highs at
$1031 an ounce level.
“Gold is the ONLY hedge you should consider against
inflation and the tumbling dollar,†says
commodities guru Garry White. “Thursday’s oil pipeline
attack in Iraq demonstrated that. One piece of
geopolitical news can send the price of oil soaring –
or plummeting.â€
“Gold offers more than just a hedge against inflation.
Standard and Poor’s – the same Standard and Poor’s who
gave AAA ratings to mortgage-backed securities –
reckons South Africa’s power crisis “will prove to be
more of a stress test than a major ratings driver.†In
other words they don’t think it’s that serious.
“Now, given S&P’s track record, you could infer just
from that statement that things must be very bad
indeed. But there are real, fundamental reasons to think S&P
are... well, wrong again.
“They come from Eksom, the South African power
generator, which has said that people should expect
rolling blackouts every second day for the next
three months.
“South Africa, of course, is a major gold producer.
And they need electricity to mine the stuff."
'Nuff said!
493 points
warren answered 8 months ago …
The US $ will go to .52 on the USDX chart at least. Once the TIC report turns up it may be time to think about going long. Also once we get a new form of gold standard that will also be time to go long the dollar. When these two line up then I will be long dollars. Until then I am in precious metal junior and exploration stocks.
Good luck to you if you think it's time to be long the dollar now. As in a bull market you buy more on corrections in a bear market you short more on bounces. Look at the long term chart. There are so many bearish head and shoulder patterns it will spin your head off.
951 points
Grudun answered 8 months ago …
In addition to the points already listed we have yet to see what is going to happen with the house of cards that is the TRILLIONS in derivatives.
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1786 points
ChaosNantuko answered 8 months ago …
While everyone here has raised valid points, there are a couple things that we need to remember.
First, the current deficit spending is likely to spur the economy, and end a recession. Its not a cause for a recession.
Second, the reduced interest rates may erode the value of the dollar in the short term, but the long term increase in economic activity will far outweigh the short term value erosion, to the extent that in the long run, it should lead to a more valuable dollar.
Finally, the market looks not at the present, but at the future. If it sees a more valuable dollar in the future, there is potential for it to go up.
That being said... going long the USD simply because it has the potential to go up higher is speculation, so at the very least, you should have a couple technical indicators agreeing with the move first. I'd pay attention to the RSI, stochastics, major trendlines/support, and moving averages, and only buy when you have a couple of those telling you to on higher volume. I'd also wait for a higher high and higher low, to increase the chance that its a true trend reversal.
246 points
engcomp answered 8 months ago …
The Schmucks who used their hard-earned euros, pounds, marks, franks etc. to buy US dollar bonds, to find that they get back only 50% of their capital when the bonds mature, are not going to fall for the myth of a hard US dollar again. Without them, how can the dollar recover?
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393 points
jester112358 answered 8 months ago …
Currency is a commodity just like gold. Print too much of it and unless the demand increases its value will decline. So, since we've got about 16% more dollars than we did about a year ago, guess which way the dollar will continue to go? That's right, down! The Fed is committed to inflating the economy by devaluing the dollar. We've decided to solve our debt problems by taking on more debt-both government and consumers like this approach! Even central bank intervention will not be enough to stop this long term secular trend. Speculators recognize this, and have been selling dollars and buying Euros, Swiss francs and yen for the last several months. The rule of thumb is countries will high interest rates on their government bonds, low current account deficites (trade and government) have the strongest currency in the long run. This means the Singapore $ and Swiss franc would be my top choices, followed by the Australian $ and the Swedish Kroner. Political stability issues would make me reluctant to speculate on Chinese currency.
Read more from jester112358 flag as abuse great answer373 points
dustbusterz answered 8 months ago …
i have to disagree with ChaosNantuko "s assertion (at this point that deficit spending is likely to spur the economy, and end a recession. Its not a cause for a recession.)
It may not actually be the actual cause for the recession, but it certainly will not spur this economy. first , you have housing losing value. because so many older citizens have their money tied to housing and stocks, and the stock market is also off its highs, you have a lot of older folks who's assets were nearly wiped out. who do you think has the most(or until recently had the most) spending power in the us?It was our senior citizens. with their life savings nearly wiped out, this will most certainly have a long term effect on our economy,. then what about the housing again? many of our younger citizens have just lost their homes because they couldn't afford them in the first place, and i don't see any meaningful improvement in the economy until the housing industry can begin to rebound.
then there is the Countries like China, The Philippines, Germany and many others who are beginning to pull their money out of the us, in favor of better returns elsewhere. this will, in effect ,stall any recovery we could hope for, and at the same time, put pressure on our government to raise interest rates, in an effort to bring back foreign investments. but raising the interest rates(at this juncture), again will have a negative effect on the economy, from the standpoint of higher inflation. we are definitely in a sticky situation right now, and its going to take a lot longer to fix this, than most people have any idea .so as far as long the dollar? i would say, not at least for the next 4 to 6 months and , its possible even longer.
264 points
MaverickInvestor answered 8 months ago …
I've made the point elsewhere that the reign of the petro-dollar is under threat. (The main thing that holds the dollar up is the fact that all commodities, and particularly oil, are priced in dollars, maintaining a healthy demand for the greenback).
Iran is selling oil in euros. Venezuela and others are threatening to follow suit. The Russians are talking about demanding roubles for their oil and gas.
And now it emerges that the Gulf states are planning their own regional currency, along the lines of the euro, by 2010.
This means that, ahead of 2010, these states will...
a) start to loosen the peg that ties their currencies to the US$
b) start to divest themselves of US$ investments
And whenever the gulfo (of whatever it's to be called!) comes into existence, you can bet they'll be pricing their oil in that currency, and ditch the dollar entirely.
So, when you have the end of the petro-dollar in sight, which means the end of the dollars' reign as the worlds currency of choice, we should be thinking long and hard about buying the US$
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