Macroeconomic factors are beginning to hint about a change in the dollar's fortunes, pun intended, if a new survey is any indicator.Still, that doesn't mean that the United States does not have work ahead to right its economic ship of state, so says one economist.
The Bloomberg Professional Global Confidence Index's dollar expectations component rose to 57.6 in May 2008 from 42.87 in April 2008, and 30.3 in March 2008. A reading above 50 indicates respondents expect the currency to appreciate in the next six months. The poll surveyed 3,447 Bloomberg terminal users.
In late Wednesday afternoon trading, the dollar rose slightly against the world's other major currencies, rising about a fifth-cent to $1.5446 against the euro, and a quarter-cent to $1.9435 against the British pound. The dollar also rose about one-half yen to 105.35 against Japan's yen. The dollar hit an all-time low versus the euro of $1.6018 on April 21, 2008. The euro has appreciated about 100% versus the dollar since 2000.
Dollar set to rise further?
Economist Peter Dawson, who did not participate in the Bloomberg News survey, told BloggingStocks Wednesday he's not surprised that poll respondents are turning dollar bullish, given that macroeconomic factors appear to be turning in the dollar's favor.
"If the Fed [U.S. Federal Reserve] is done lowering interest rates, and if U.S. consumers are cutting back purchases of imported goods, and if the U.S. economy has bottomed, that would suggest the dollar is set to rise," Dawson said. "But notice I had a lot of 'ifs' in there. This is by no means a certainty. If the [U.S.] economy falls into a deeper recession, the dollar could continue to fall."
With the above in mind, Dawson also sought to place the new, dollar-positive sentiment in the proper context: There's a great deal of economic work to be done, he said. "The U.S. still has large federal budget and trade deficits, oil and food costs pressures adding to inflation and a bad housing slump," Dawson said. "When those problems have been addressed, then we can expect a long-term rise in the dollar."
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Reader Comments (Page 1 of 1)
5-15-2008 @ 12:12AM
jerry mcdonald said...
i would like to know why anyone would think the dollar is worth anything? No manufacturing, worthless banks, worthless college,high school, broke companies, overpaid CEO'S, nothing war, no commodities,subsidized farmers. Worthless congress,president,and illegals.
5-15-2008 @ 7:12PM
Mike Sanders said...
Do you think that you may be a tad overly-pessimistic? I see a lot of activity where I live and there's lots of people enjoying life. Turn away (180 degrees) from the old ways, which are going away, and embrace the changes, going on. I don't say that lightly, because I lost my job, several years ago and I am still getting over that crushing experience. Go where there is life and do what you can... It may not be what you thought was neat in the eighties, or nineties, but it can be even better, when you start to change... Again, I lost my mind, literally, after losing my job, so I don't say this lightly to anyone. I will never be a Communications Project Specialist, again... Thank God! The change that everyone is talking about has nothing to do with politics (false hopes)... It has to do with an individual's heart and mind. Where there is life, there is hope! Ask God to help you change and He surely will bless you. Don't wait for someone else to change, or the rulers to change, or even the weather to change, because life is too short to be living it by proxy.