Comments on: US Dollar rising dramatically http://www.creditwritedowns.com/2008/10/us-dollar-rising-dramatically.html a finance news and opinion site Sun, 21 Mar 2010 18:21:48 +0000 hourly 1 By: Edward Harrisonhttp://www.creditwritedowns.com/2008/10/us-dollar-rising-dramatically.html#comment-507 Edward Harrison Thu, 23 Oct 2008 17:47:00 +0000 http://www.creditwritedowns.com/2008/10/us-dollar-rising-dramatically.html#comment-507 Andy, you're on to something because, ultimately, the dollar is a weak currency given the amount of money that is going to have to be pumped into the economy. Remember that the ECB can't match the Fed in inflating the money supply.<br/><br/>As for why the dollar is rising, I am skeptical abut the safe haven status. I think a lot of it has to do with a realization that interest rate differentials are going to come down as Europe and elsewhere weakens. And, add to this the need for dollars to refinance foreign financial institutional debt requirements a you have the (temporary) makings of a dollar rally.<br/><br/>The Dollar was way oversold at 1.60 to the Euro. But, I am astonished at the severity of the move. Andy, you’re on to something because, ultimately, the dollar is a weak currency given the amount of money that is going to have to be pumped into the economy. Remember that the ECB can’t match the Fed in inflating the money supply.

As for why the dollar is rising, I am skeptical abut the safe haven status. I think a lot of it has to do with a realization that interest rate differentials are going to come down as Europe and elsewhere weakens. And, add to this the need for dollars to refinance foreign financial institutional debt requirements a you have the (temporary) makings of a dollar rally.

The Dollar was way oversold at 1.60 to the Euro. But, I am astonished at the severity of the move.

]]> By: Andyhttp://www.creditwritedowns.com/2008/10/us-dollar-rising-dramatically.html#comment-501 Andy Thu, 23 Oct 2008 13:51:00 +0000 http://www.creditwritedowns.com/2008/10/us-dollar-rising-dramatically.html#comment-501 Good article, though I think in the longer term a weaker dollar will return. As I <a HREF="http://www.savingtoinvest.com/2008/10/us-dollar-rising-and-outlook.html" REL="nofollow">wrote recently, the rapid rise</a> of the US dollar in the near term is a result of the flight to safety to US treasury's due to the global financial meltdown (yes people short the dollar are suffering!). This just shows despite America's longer term challenges it is still viewed as the financial bastion of the world. Hard to believe with the all the institutional collpases, but in Red, White and Blue we trust. Good article, though I think in the longer term a weaker dollar will return. As I wrote recently, the rapid rise of the US dollar in the near term is a result of the flight to safety to US treasury’s due to the global financial meltdown (yes people short the dollar are suffering!). This just shows despite America’s longer term challenges it is still viewed as the financial bastion of the world. Hard to believe with the all the institutional collpases, but in Red, White and Blue we trust.

]]> By: Edward Harrisonhttp://www.creditwritedowns.com/2008/10/us-dollar-rising-dramatically.html#comment-498 Edward Harrison Thu, 23 Oct 2008 08:42:00 +0000 http://www.creditwritedowns.com/2008/10/us-dollar-rising-dramatically.html#comment-498 The rise in the dollar is not good. It is rising against everything right now. In my estimation, this makes deflation more of a threat down the line.<br/><br/>And the exports that you speak of. Also not good.<br/><br/>Right now, there are so many moving parts that it is hard to discern what will happen next, honestly.<br/><br/>That said, I do think the next show to drop will come from somewhere tangential like Hungary or Latvia or Argentina. But, this may lead to a renewed sense of panic and another leg down in the crisis.<br/><br/>Policy makers are advised to get well ahead of this one and relying on stimulus packages is not going to do the trick. The rise in the dollar is not good. It is rising against everything right now. In my estimation, this makes deflation more of a threat down the line.

And the exports that you speak of. Also not good.

Right now, there are so many moving parts that it is hard to discern what will happen next, honestly.

That said, I do think the next show to drop will come from somewhere tangential like Hungary or Latvia or Argentina. But, this may lead to a renewed sense of panic and another leg down in the crisis.

Policy makers are advised to get well ahead of this one and relying on stimulus packages is not going to do the trick.

]]> By: Wag the Doghttp://www.creditwritedowns.com/2008/10/us-dollar-rising-dramatically.html#comment-496 Wag the Dog Wed, 22 Oct 2008 18:05:00 +0000 http://www.creditwritedowns.com/2008/10/us-dollar-rising-dramatically.html#comment-496 <i>they are dramatic and someone somewhere is nursing some very big losses.</i><br/><br/>Such as all those people who bet on hyperinflation sinking the dollar or had <a HREF="http://www.ft.com/cms/s/0/1927586a-a046-11dd-80a0-000077b07658.html" REL="nofollow">bought a whole lot of gold</a> recently during the recent panic. <a HREF="http://www.kitco.com/charts/livegold.html" REL="nofollow">Gold has just dropped</a> below $750/ounce. But wait long enough (>2 years?) and <a HREF="http://www.forbes.com/finance/2008/10/21/gold-mining-energy-pf-ii-in_ch_1021soapbox_inl.html" REL="nofollow">inflation may eventually win out</a> and the goldbugs can claim victory. <a HREF="http://www.cnbc.com/id/27317048" REL="nofollow">Jim Rogers is buying up the cheap commodities</a> in expectation this will eventually happen.<br/><br/>Price of government bonds in Europe are slowly rising on the interest rate cutting expectation. <a HREF="http://www.iii.co.uk/news/?type=afxnews&articleid=6965387&subject=economic&action=article" REL="nofollow">UK gilt yields are dropping</a> ahead of <a HREF="http://www.iii.co.uk/news/?type=afxnews&articleid=6961312&action=article" REL="nofollow">tomorrow's auction</a>. Looks as though there are still plenty of buyers for all the extra government debt that will be issued in the wake of banking bailouts.<br/><br/>Oh, and what will this strong dollar mean for American exports? Will USA forever be the consumer engine of the world now that imports look even more attractive? And is the temptation to <a HREF="http://blogs.reuters.com/mediafile/2008/10/21/outsource-baby-outsource/" REL="nofollow">outsource more American jobs</a> all the more irresistible? they are dramatic and someone somewhere is nursing some very big losses.

Such as all those people who bet on hyperinflation sinking the dollar or had bought a whole lot of gold recently during the recent panic. Gold has just dropped below $750/ounce. But wait long enough (>2 years?) and inflation may eventually win out and the goldbugs can claim victory. Jim Rogers is buying up the cheap commodities in expectation this will eventually happen.

Price of government bonds in Europe are slowly rising on the interest rate cutting expectation. UK gilt yields are dropping ahead of tomorrow’s auction. Looks as though there are still plenty of buyers for all the extra government debt that will be issued in the wake of banking bailouts.

Oh, and what will this strong dollar mean for American exports? Will USA forever be the consumer engine of the world now that imports look even more attractive? And is the temptation to outsource more American jobs all the more irresistible?

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