Move over USD, here comes the EUR

Trading Discussion News and Economy
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Hi all.
Let’s talk fundamentals. Technicals even.
The USD.
It’s the world’s reserve currency. Meaning, it’s the most used currency in the world. It’s influence is not paralleled in the world today. Therefore we can say that it’s the most stable currency. The most trusted.

Or is it?

Look. A lot has happened this year. Probably more than any other year. The world’s Pandemic. Many things are changing, everything from our individual lives all the way up to the most macroeconomic relationships.

In this thread I want to focus on what’s happening to the USD. The fundamentals of it as well as the technicals.

  • Are we witnessing a (major) change in the credibility of the USD?
  • Will there (ever) be a new, other, world reserve currency?
  • Will the EUR overtake it?

According to this article, a lot of money managers think so.
Check it out.

https://www.bloomberg.com/news/articles/2020-07-24/dollar-is-losing-its-luster-as-investors-line-up-to-go-short?cmpid=BBD072720_MKT&utm_medium=email&utm_source=newsletter&utm_term=200727&utm_campaign=markets&sref=ZjQkMDb6

Look.
If this is nothing but a short term dip, for the Dollar, and comes back alive, then fine. We’ll stuff this thread to the back and forget about it.
But, we are living in different times.
This very well could be the start of the demise of the USD. Therefore I want to track the progression and the turn of events that may come about.

Feel free to post any arguments for or against this situation.
Personally, I really don’t care (being a US citizen).
Let’s all be unbiased. And document this.

Talk to me.

Mike

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I think the dollar will be fine under any circumstances. Because the economy of the dollar’s homeland is strong and mobile enough to adapt in any situation and to return to the framework of stability.

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Ooh. :open_mouth: This sounds really interesting Mike! :open_mouth: With everything going on, it’s definitely not impossible. I read a bit about this and it says that:

"Back in 1995, econometrical analysis suggested the euro could replace the dollar as the major reserve currency by 2020 if two conditions were satisfied.

The first condition was that the remaining EU members, including the UK, would adopt the euro by 2020.

The second condition was that the depreciation trend of the dollar should continue into the future."

When the euro overtakes the dollar | Features | IPE.

Well, the first condition seems more unlikely now. :confused: But I’m excited to see what the others have to say about this. :thinking:

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I think the first option won’t be possible

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Hi all.
I subscribe to a morning new letter. Bloomberg.
This is very interesting to me. You need to look down at the bottom of “what Joe is interested in”
We’re talking the USD.

https://mail.yahoo.com/d/folders/1/messages/26834

I don’t know if this is gonna work. Cause it’s an email to me.

Even more important is the article he refers to.
https://www.bloomberg.com/news/articles/2020-07-28/goldman-warns-dollar-s-role-as-world-reserve-currency-is-at-risk?cmpid=BBD072920_MKT&utm_medium=email&utm_source=newsletter&utm_term=200729&utm_campaign=markets&sref=ZjQkMDb6

I like how “Joe” levels this one sided argument.
Remember, we need to be unbiased.
Will this be a topic we will continue to discuss?
We’ll just have to see.

Mike

P.S. -
This is what he said.
2020-07-29_09-21-08
2020-07-29_09-22-17

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This didn’t work, but your Bloomberg article link did, so thanks for that. I shared the following yesterday elsewhere here. Might be of interest to you, on the same topic.

https://seekingalpha.com/article/4360884-u-s-dollar-depreciation-ahead

The comments section is also worth your time to get more opinions than just the author.

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Hi all.

Got another good article. From a very reputable economist.
I think it’s good to keep this stuff in mind.

What do you think? Especially my European friends over there?
Do you guys agree?

Mike

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I for sure am a proponent of the EUR taking over theory. The pandemic has hit the US markets more than any other place.

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This is true but the US can also just keep printing money? Although I do wonder what the effects of that are. It can’t be good? Good for now though. :woozy_face:

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Not a bad artiicle at all - misses some stuff and has different slant from my own view - like I didn’t even KNOW that there was such a thing as “The European Project” - ie ALL the Nations to be taken over completely by Brussels ! - until someone mentioned teh “EU Project” on here I think - around 2015 ! - Most in the UK didn’t know either and I’m sure the fact that we had been deliberately deceived by our own “Government” was one of teh major drivers of Brexit ! - I’m pretty sure the majority of the citizens of teh countries making up the “EU” - Still don’t know !

This has to be a huge indicator of teh deception being excercised by the “EU”, Individual Govts, AND more to the point - THE MEDIA !

The simple fact that within 2 miles of teh EU Headquarters in Brussels - there are more than 10,000 people paid MORE than the Prime Minister of teh UK - may be taken as some indication of WHY - we don’t know that ! (Favours repaid ?)

What we also know is that the EU has a decliing share of world trade and has had for some time - their principles are NOT based on trade - but on Protectionism and tarrif barriers. So we in the Uk are likely to be able to import goods after Brexit from “The rest of teh World” Cheaper than we can currently from the “EU”.

If the Euro strengthens - then the EU’s ability to export goods at higher prices than now - can only be negatively affected. - A problem which teh Swiss (Highly regarded as a “Safe Haven” are very aware of and one of teh reasons their Central Bank tries to keep CHF low by buying other currencies (including USD and EUR)

I also think the guy writing the article Underestimates significantly - the underlying contempt that a growing number of Europeans have for teh “EU” and “Brussels” - He also fails to mention the Ruling of the “Constitutional Court of Germany” - that Germany in particullar CANNOT give away “Constitutional Powers” to Brussels !

However @ponponwei correctly observes

As I understand it EU and CHF “interest rates” are AREADY negative and 100 year bonds actually sell for more than face value - The EU Does seem to operate on the principle that “Loans must be paid back” - which stores up pain for those “Granted Loans” denominated in Euros - Effectively with the danger of converting their countries into Banana Republics ! (Greece has had to sell off all it’s ports, and airports - just to keep up “Repayments” of teh previous “Kind loans”.

We know that Germany sufferred greatly from Hyper-inflation and now the apparent insistence on “Prudence” - may well have a deliterious effect in the opposite direction ?

I don’y know mate - but what I do know is that there has Never been any form of currency (you can possibly argue “gold”) - which has survived in the long term ! (GBP is the longest lived so far!)

We are in new experimental territory here and I think it is dangerous to make any assumptions about long term stability.

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For EU PROJECT read GERMAN PROJECT :rofl:

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Thanks F!
Such good points!!

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And don’t even THINK about looking up Walther Funk

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Please don’t start me !

The Germans are not very good at winning wars. Two recent big time failures, now new tactics.
Ve vill take over by stealth. :cold_face:

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Thank God for BREXIT !

The penny finally dropped.

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Hello.
Well, we’re still getting these articles on whether the USD is gonna be taken over, by the EUR or not. I mean, who really knows, until it happens. But, I do think we should keep this stuff in mind. Nothing wrong with that, right? Well, check out this article. Boy, it raised my eyebrow. Check out the third illustration down. Now that’s interesting!

https://seekingalpha.com/article/4368697-is-dollar-to-crash?utm_medium=email&utm_source=seeking_alpha&mail_subject=financial-sense-is-the-dollar-about-to-crash&utm_campaign=rta-author-article&utm_content=link-1

What do you guys think?
Agree?
Or nonsense?

Mike

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Even if it happens, it should be very slow process. And to ditch some asset which is used as means if international payment and store of value you have to find an alternative. There are currently no better substitute for USD. Yuan or Euro you can say. They are mired in their local issues like fears of EU integrity or capital controls on Yuan. Bitcoin or Gold? Not for so big community as our world.

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Great discussion here. Both countries are in huge downturn, but there are elections in the US which is making additional pressure on the USD. However, with all this in mind I think that there is potential for USD to gain back some strength back