Weak Dollar?

[ShakaKhan]

Dear Pipski,

Perception is Reality my friend! ride the wave and get out before everybody else does!

[natsuto]

Dollars to reach all time high against the yen in seven weeks. However, for yen traders, warnings, I would not bet against the yen over-reliance on.

[are9are9s]

you can read my little post on the inflation - and what makes the dollar weaker. The old saying “when the american economy sneezes, the rest of the world gets sick,” doesn’t really apply to economics as much as it used to. Markets are independently becoming stronger - without the influence of america. Just another paradigm shift.

[system]

There are multiple reasons why the dollar is weakening these days. First, you have to remember that the USD made an impressive rally against most of the major, during the second half of last year, so it is natural that the majors are now correcting against the USD. Second, the good economic data raised the stocks market, which usually have a negative correlation with the USD, and that it is another factor for the weakening.

[Master_Tang]

Newbie here but I’ve always been prejudiced to fundamentals.

I’m thinking dollar will continue to weaken for the following reasons:

1. Inflation is being deliberately underreported so maybe under “discounted”.
2. USD is becoming less and less [necessary as] a preferred reserve currency.
3. Fed seems oblivious to #1 and #2 and only seems to exist for #4…
4. It is politically popular to print USD as if US were still the only reserve currency in the world.

As I said I’m a newbie, but every time I’ve been stopped out so far, I wish I had just held firm to my fundamental convictions and not even set a stop.

What do you think?

I’m thinking you had to dig pretty hard to find a five year old thread to dredge up.
The dollar’s response, and reasons for strengthening, and weakening are far different today, than they were five years ago.

And you’d be a fool to trade without a stop with the intention of letting losers come back. Most often, they do. But it could take YEARS.

There was a fellow on here a while back that had a 100k live account. He opened I don’t know how many mini lots long on USD/JPY at somewhere around 83.00 saying he expected a move to the high 80s, and low 90s over the next several months to a year. His logic was that the yen was very near an all time high against the dollar, and there was no way it would break that high with any sustainability. And with an account that size, and only six or seven mini lots open, he could withstand a drawdown long enough to get back into profit.

Several of us tried to talk him into at least preserving SOME capital should something bad befall the pair. He never heeded the advice as far as I can remember. He just argued his point more emphatically. It wasn’t but a few months after that thread that the quake struck. It’s only been over 80 once since then. 100k is a lot of money to throw away being stubborn…

Edit: Here’s the thread > 301 Moved Permanently

[timothyblack235]

Yesterday several important US economic indicators were released - housing starts, jobless claims and PPI. They were all positive. In good economic times this would increase investment flows and strengthen the dollar. But in bad economic times it means decreased demand for the dollar as a safe haven currency ie a more risk-on environment. Hence the sudden weakening of the dollar yesterday.

[Kratos]

1. Inflation is being deliberately underreported so maybe under “discounted”.

Why do you think so? Inflation is low because banks which receive Fed’s capital don’t funnel it into the economy prefering to build on their own reserves.

2. USD is becoming less and less [necessary as] a preferred reserve currency.

So what’s the most preferrable reserve currency now? JPY? Traders are afraid that BoJ will again intervene and sell tons of JPY to lower it’s rate. CHF? As we can see SNB furiously defends EURCHF peg at 1.20 and if the rate goes lower they also will be ready to intervene again.

4. It is politically popular to print USD as if US were still the only reserve currency in the world

For now the effect of Fed’s QE is only starting to appear. As we can see the US fundamental indicators are improving and I don’t think this trend is to be broken in the foreseeable future. That’s why printing USD actually led the way out of the recession.

Of course USD can make temporary spikes lower for the reasons mentioned by [B]timothyblack235[/B]. But the general picture I think is not to be changed.

[ShakaKhan]

I have a question… When the U.S. was forced to pump over 2trillion dollars into our economy to keep it afloat (and when i say dollars i mean green pieces of paper) we went into a major recession, but we didn’t collapse and we’re are still the reserve currency of the world (for now.) Meanwhile the Euro crisis, which seems to be being handled with these LTRO’s, (they are actually backing there money up! what a thought) has used up a couple hundred billion and yet there seems to be as much panic as when the U.S. recession hit. Why is that?

[Edward74]

This inflation news was pretty ho hum and largely discounted.

[Kratos]

I have a question… When the U.S. was forced to pump over 2trillion dollars into our economy to keep it afloat (and when i say dollars i mean green pieces of paper) we went into a major recession, but we didn’t collapse and we’re are still the reserve currency of the world (for now.) Meanwhile the Euro crisis, which seems to be being handled with these LTRO’s, (they are actually backing there money up! what a thought) has used up a couple hundred billion and yet there seems to be as much panic as when the U.S. recession hit. Why is that?

I believe the point is in the danger of knock-on effect. EU is a conglomerate of very different countries and if one of them is allowed to default the rest might think like ‘hey we want to dump our debts too!’. And this could lead to defaults in Portugal, Ireland, Spain or even Italy and therefore - to the crash of the whole EMU.