dollar weakness

Discussion in 'Forex' started by man, Apr 22, 2003.

  1. man


    I found it rather interesting that military victory could not stop the dollar decline more significantly. I think next target is 1.15 to the Euro and 130 to the Yen.

    What is the new rational behind this?

    interest rate differential? -> well known thing for years
    trade deficit? -> dedo

    I guess what remains is the forecasted budget deficit. The question is why the market thinks Europe or Japan will do any better.

    In any case, the lack of dollar euphoria after victory seems to telll something.

  2. JayS


    Why do you think the $ will weaken against the Euro but strengthen against the Yen?
  3. man


    I haven't thought in terms of Euro-Yen, it was the implied residual.

  4. man


    I would have thought the dollar will remain somehow stable at current levels, but given recent movement it looks like it was just a bounce and not a trend end. I can somehow understand rationals behind a stronger Euro against the dollar, but i can hardly believe the yen can outperform the dollar.

  5. just21


    I can't see a reason the euro is so strong. The german economy, the eurozones biggest, has unemployment at 10.6% and no growth.
  6. riggz


    does anyone here lend any credence to the articles that have popped up recently about the euro possibly taking over the dollar as the main currrency used for oil transactions, and as a result trade transactions, and reserves at foreign banks? these articles say that this is why the euro is gaining strength...

    and for those conspiracy theorists, was one reason for the war in iraq, since iraq had switched over to the euro in about dec. 2001, and iran was thinking about it as well. if this gained momentum, and eventually all of opec switched to euros, most countries would have no reason to use dollars anymore, thus possibly greatly devaluing it.

    side note: articles on msnbc say that they;'ve found about a billion dollars in u.s. dollars hidden in some stashes in baghdad, is that enough to make a dent in the dollar's value (it should devalue it, most likely just a little) heh heh
  7. Mecro


    Iraq switched in Nov 2000, not dec. 2001

    BTW, it is not a conspiracy theory but a simple fact already. In case it is not obvious, USA needs Iraq's oil reserves to retain the dollar strength and disband OPEC (which has been considering Euro since their last meeting)

    It's in the news already. Iran and Syria are ready to switch to the Euro. The Iraqi dinar is being replaced with the dollar. Everything is according to the plan, so far.

    Also, Japan is so heavily reliant on USA that the Yen can never really beat the dollar. Japan is near a financial crisis everyday and can also bring a small crisis to USA if they ever liquidate their huge US denominated assets (mostly Treasuries). On the other hand, if the dollar devalues, Japan's assets will devalue as well, they will be liquidated at a loss and Japan will be in the financial crisis that is over its head.

    I think it is interesting that the European Union's economy is nothing to proud of. But the Euro at least represents that economy. US dollar represents USA's debt ridden economy and the fact that the dollar is the reseve currency for oil which is about a 20-40% premium. I think a lot of currency traders are taking bets that US will not succeed in Iraq. Regardless, the debt situation in this country also warrants a lower dollar.
  8. jaiko


    reason for euro strength is simple ----higher interest rates in euroland
  9. Pabst


    Agreed. Global capital chases yield.
  10. I don't give much credit to the oil for euro's theory. It is clear that is a nonstarter, now that we directly control the second largest oil reserves and indirectly control the largest. In any case, the last thing the ECB wants is a much higher euro. My guess is the US Treasury is quite happy to see the dollar gradually fall. I know US-based multinationals are.
    #10     Apr 23, 2003