How does "stronger-than-expected" US data contribute to the faling of US dollars?
How should I interpret this excerpt from CNN Money last week?
"The dollar on Monday slid to its lowest price this year against the euro and a basket of currencies as stronger-than-expected U.S. data and sharp gains in equities reduced safe-haven demand for the greenback."
Best Answer
3963 points
MNSL answered 5 months ago …
Current dollar weakness is likely to continue in short term. There will be volatility as well. However next two months will be very crucial for the currency market. Look for any developments in the market, economy and other relevant factors.
Recent examples include
The German GDP figures and Industrial Production figures, which plunged to a new record low, falling by 22% across the Euro zone. We should have expected a significant rally in the US dollar as a result of such poor figures and yet the Euro continues to maintain its upwards trend, and one can only assume that this is fuelled on sentiment rather than fact
Despite rise of interest rate, some currencies went up against US Dollar recently.
Despite weak data, currency value has increased in some currencies.
I do not think interest rate and currency adjustments could control inflation effectively in any country. During higher interest rate environment, we had bubble for commodities, and many assets including housing.
Inflation should control buy-increasing supply, by implementing better macro economic policy and by saving more and more etc.
