Read past Market Outlooks Recent price action in the foreign exchange market in our estimation is a function of a short-term rebalancing in expectations of global growth and demand for commodities. When combined with the pause in the rate hike campaign at the European Central Bank and growing uncertainty regarding the prospects for economic growth in the United States dollar bulls that have been lurking in the shadows for the past several years have re-emerged with gusto over the past two weeks. Although, the late summer rally in the dollar that has seen its value increase roughly 8% against the Euro, the case for a sustainable reversal in the fortunes of the greenback is neither persuasive nor compelling.The trend in the value of the dollar since mid summer of 2002 has been downward. The accommodative monetary policy at the Fed and benign neglect of the greenback of the Bush administration has been the primary culprits behind the debasing of the dollar. Yet, the rapid decline in the value of the US currency over the past year has been driven just as equally due to lingering problems in the financial system and what at best can be described as a sluggish economy.Safe Haven | The Dollar: Short-Term Rebalancing Of Expectations, Long Term Risk
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