Passage of Obama's Stimulus Could Drive the US Dollar Down
by Ryan Teeples
In the face of a steady rush of bad news coming out of the US, the Dollar has strengthened considerably against major world currencies over the past two months. If you take a look beyond our borders, you'll see that the economic crisis is indeed world-wide. The adage is: When the US catches a cold, the world ends up with the flu.
So despite an ailing economy, rock-bottom interest rates and a banking industry on the brink, the US Dollar (USD) has been attractive enough to foreign investors to gain back some value it had lost over the past five years. The dollar has traditionally been a safe-haven of sorts when world economic conditions are shaky.
But don't expect that to continue if President Barack Obama's $900 billion stimulus package gets the thumbs up from Congress. Passage of the bill would make the greenback less attractive than other major currencies in a whirl-wind world economy.
Should this pass, it may be a major enough factor to disrupt the current trend of the US dollar against the other major world currencies. Flooding an economy with large amounts of debt drives treasury bond prices down, and could trigger an exodus from US bonds as a safer investing instrument.
So what does this mean to you?
Get free trading ideas and analysis with our email Newsletter
The US dollar is the quote currency used to trade oil and other major commodities. Weakness in the dollar drives the price of those goods up for US consumers. Not to mention the fact that bond prices could go through the floor. That also influences lending rates, which would make mortgages more expensive.
I read your article and found it very interesting but while I was watching S.wade's Intermarket analysis, he has a different opinion about what the stimulus package will do to the Usd.
I think if the congress aproves it would send the stocks higher and that should hurt the dollar value but on the other hand isn't the fed already injected that kind of money last year and we are seeing a Strong Usd...
Joshua
- Used Car Stimulus
|2009-02-06 01:24:55
Yes, your right on in this article....this all feels like a bad used car lot deal....to think they are trying to help everyone and all it will do is bankrupt us when the prices go throug the roof.
What good is the economy if everythin is to expensive?
Oh thats right, these folks want it all for themselves so no prob there!
fewticks
- Where the US Dollar gone?
|2009-02-18 02:52:54
Last few years, we can see alot of dreaming report of all investment activities. The assets of all company rise up very fast, but no one relise that, these arising just keep in book of the accountant. They think they have alot of USD in their pocket, but we are wrong. Until they sell all stock, land, property they have turning it into cash, they are really holding USD.
But no one do that, now, every thing come down. And the USD in that accountant book come down to. No USD note disappear, just the believe, hope of gaining disppear...
Now US government will collect all USD note on over the world come back to their banks by issuing alot of debt note.
Then no reason for US note become weak... I dont think need to talk much about that. Just wait and see.
Good luck!
Comments deemed inappropriate will be removed
3.25 Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."
Read/Post Comments
