Forum - US Dollar Index 14-Year Chart (Topic)

cougr

Australia

Posts: 101

15 years ago

Jul 2, 2009 10:43

Spec ,if you compare the chart of the emering markets index you will note its inverse relationship to the dollar. Signs of strength in this index portend a weaker dollar down the road. Also apart from the myriads fundamental reasons for a weaker dollar all of which have received copious coverage,perhaps the most cogent argument for further weakness comes from the fact ,as Ashraf has pointed out many times previously ,that the dollar is in a secular bear market which has many more years to run. Sure the dollar is going to have its periods of bullish runs but the longer term trend remains downwards.

speculator

Posted Anonymously

15 years ago

Jul 2, 2009 10:30

ok fair enough i know nothing is impossible but how can dollar index fall if emerging economies take over the world.

Ashraf Laidi

London, UK

Posts: 0

15 years ago

Jul 2, 2009 10:28

spec, after all that had happened in past 2 years, one must not use the expression "hard to beleive" or "inconceivable" or ... like i said; look how USD fell from 2002 highs. it had only 2 rebounds/corrections: 2005 and H2 2008-Q1 2008.

Ashraf

speculator

Posted Anonymously

15 years ago

Jul 2, 2009 10:19

Please can you epbriefly explain how the dollar index will go down if brics do well? The dollar index does not include developing countries. Thanks

speculator

Posted Anonymously

15 years ago

Jul 2, 2009 10:05

Ashraf thanks. But usdx may have bottomed at its lowest before the 8pc that is what. I was saying. So it has rallied well since 2008 so is at the start of a bull I think. Hard to believe it woulf go some 25pc lower from here.

Ashraf Laidi

London, UK

Posts: 0

15 years ago

Jul 2, 2009 9:55

alive, spec, carlco and others. many thanks for all your contributions

dollar index is 8% above its lowest point ever on trade weighted basis so im not sure why you think it's in a bull market. you should look at the charts when you decide whether something is in a bull/bear market and not teh fundamentals. yes, european fundies have some very bad dynamics but that does not describe the chart. i also disagree that EU UK are suffering in EXACTLY same way as US is suffering. i made my case about US consumption and debt-based economies being lacking its biggest engine but nobody replied to that. saying something is just as bad or just as good w/out providing arguments wont really cut it in a discussion.

for those who think the US will continue to bail out the world out of recession think again. didnt you forget that last year the BRICS accounted for over 60% of the increase in global growth? now let's not use the 1970s attitude that this so-called less developed nations will need the rescue of the US. things are changing and the BRICS are not a fad. they produce real stuff, commodities and also buy things from US europe and Mideast.

This is not 2002 or 1999 when the US used to purchase 1/5 of the worlds exports.

would love to discuss more but it's a v. busy day. again, i urge people to read into the arguments, think about them and provide counter arguments and not just make blank statements (this country isbetter than this country and thats it).

Pls research on how much the BRICs are contributing to world economty in supply and demand and how has this chanegd over last 5 and 2 years.

Ashraf

Steven Blyth

London, UK

Posts: 148

15 years ago

Jul 2, 2009 9:42

Carlco. To say consumer driven economies are the problem i believe is over simplifying things. Consumerism itself is healthy as long as personal debt doesn't spiral beyond. And who's to say China will be having a party? They have, like Norway been quite responsible building up their sovereign wealth while such countries as the U spent all their north sea oil years ago. Social behavior is changing in China and needs to change to allow for less dependency on exports (which is problematic for them now). The lessons the Chinese will hopefully learn from our mistakes is that out of control consumerism leads us into out of control debt. China as part of their economic ascent needs its people to become more consumerist (if thats a word). Just thoughts.

speculator

Posted Anonymously

15 years ago

Jul 2, 2009 9:41

carclo,

keeping rates artifically low can help for a while as it did in the early 2000s when the us was almost near a recession. then it all went belly up when bubbles were creating promoted by cheap us dollar short term rates.

the emerging markets cannot bring the US out of recession as they are net exporters.

why would us raise interest rates to benefit the dollar? it would have far more devestating effects on recovery.

Carlco

UK

Posted Anonymously

15 years ago

Jul 2, 2009 9:16

Well Ashraf $2tril reserves won't get you very far, if your population is getting drunk on champagne, haven't they already lent out $500billion so far, my point is that consumer driven economies are what's led us to the state we are in.
Q. As in Japans lost decade, I believe we are heading for a world of stagflation, this 0% interest rate policy i don't really understand the mechanics of it. My point is if it didn't work in Japan with a busted banking system and the rest of the world on boom, how is it going to work now ? Are we to rely on South America, India, Africa, Australia, Russia and China, to drag us out of recession ?
Q. Wouldn't it be best, bizarrely, if the US began raising interest rates now? that would be good for the dollar right? lowering oil prices and getting things moving ?
oh btw, i was listening to a podcast on companies Chapter11's in the US, the banks are sweeping accounts of some medium size firms for all their working capital, even when their assets are 10 times the borrowings, no wonder the West has come to a standstill, this example was a boat builder worth about 500-600 million, borrowings of 60million, it's a disgrace.

speculator

Posted Anonymously

15 years ago

Jul 2, 2009 7:57

ashraf, global investors would just snap up their bonds (oversubsribed usually) like they do so they could just borrow more and do more QE.

i think part of the issue with a weak dollar was that too much was being sold off due to domestic consumption and dollar diversification into risker assets as part of portfolio investments abroad.

obvously anything could happen, china is backing up US dollar but may quietly diversify out over time but that could harm its exports to US. the fact that it has so much of the stuff it aint in chinas interest to see the dollar fall as they would substantially lose.

investors are less worried about debt ratings than they should. when the uk got a negative outlook from s&p (i think) the market quickly overlooked this stormed higher. that seems odd considering the uk is a small economy and a riskier currency than say euro in terms of reserve status.