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The U.S. dollar is getting hammered in world markets after the Federal Reserve announced plans to buy $300 billion in long-term U.S. Treasuries. When the Fed buys bonds, it creates more money and that money is pumped into the economy. More dollars have the effect of weakening a country's currency. This is what is causing the present sell off in the dollar.
For investors this creates a new dilemma. For the short term, there will be pressure on the dollar. Should you then bet on further weakness and sell short the U.S. currency? That might work. On the other hand, if the Fed is right and the U.S. economy recovers quicker than other world economies, the dollar would gain strength against other currencies. So then do you seize this opportunity and use the present dollar weakness as a chance to buy the U.S. dollar?
These are the kinds of decisions that foreign exchange traders are grappling with. Do you buy or sell? Do you bet on the long-term resilience of the U.S. economy, or will the economy worsen, the stock market fall again, and investors become panicked again and sell the dollar? These are the kinds of discussions that are taking place in trading rooms across the globe.
If you had to pull the trigger, would you buy or sell the dollar?
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Reader Comments (Page 1 of 1)
3-21-2009 @ 11:05AM
Defazio.anthony said...
Keep it simple, over the short-term the dollar is weak. So we should sell the dollar. Now look for a currency over the long-term where the dollar is also weak, which creates another scenario to sell the dollar. When both situations occur and you find a good risk to reward ration,pull the trigger. Best of Trades: Buy NZD/USD .
3-21-2009 @ 12:55PM
Dr. Pepse said...
The long term trend for the dollar will be down. How will the US pay for 1. the stimulus, 2. defence 3. wellfare 4. fannie/freddie 5. Social Security 6. Medicare/Medicade 7.interest on dept 8. Bailout 9. $65 trillion in toxic CDS's 10. the next crisis
They can not pay for it so the Fed will continue to purchase bonds from the tresury, thus diluting the dollar.
3-21-2009 @ 12:15PM
roy.annamaria said...
Other countries always follow the US. Look at back in Oct with we did the first bailout. I was in Italy at that time and everyone over there was waiting for what the US was going to do. Example if they have 1 Euro and we have 1 Dollar in circulation they are both equal in value. If the use print 10 more Dollars we will have 11 Dollars and the Dollar would be worth 1/11th of a Euro. However, if countries who use the Euro are even worse off than we are, then right after we print the 10 Dollars they will print 13 Euro and we will be right back were we are. Just more Dollars and Euros in circulation benefiting those who end of with them.
3-21-2009 @ 1:45PM
adamh said...
Sell.
3-22-2009 @ 6:22AM
KarlW said...
I'd sell. Taking stupid gambles is what caused this mess. For the next 6-8 months, I would only invest if I'm absolutely certain of a return. As far as the USD is concerned, nothing is certain.
3-22-2009 @ 1:10PM
Dave said...
The US Dollar - thanks to 12 years of the BUSH administration - isn't worth a lit fart in a wool mitten. I don't know anyone in their right mind who knows the FACTS who would take anything in trade for USD. I guess the only reason it buys ANYTHING these days is because people got used to BELIEVING it has intrinsic value, but it has NONE.
What is to be done? I guess the ONLY answer at this point is to WITHHOLD your income tax - which is ILLEGAL and UNCONSTITUTIONAL to begin with, and the IRS has LOST Federal Court cases where they tried to prosecute people for not paying up on April 15th. See a most informative video on http://www.Net4TruthUSA.com/TaxesAtWork.htm
Also read about the SHADOW Government that has been in Washington DC since the JFK assassination - They TRIED to impose a FACIST dictatorship in 1932 in a Plot To Seize The White House - read the BANNED book online FREE / get a printed copy http://PlotToSeizeTheWhiteHouse.Net4TruthUSA.com
SELL!! SELL!! SELL!!
Sell while there are still SUCKERS out there willing to trade something of VALUE for something that is totally WORTHLESS!!
Visit us also on http://www.AssholesAmongUs.com for a good laugh - Laughter is better than psychiatry.
3-24-2009 @ 12:41PM
Defazio.anthony said...
I agree the dollar is worthless, but a stab at the Bush Admin. is not the problem. You are making statements with not basis.
If you weren't inclined to sell the dollar before look at the recent statements out of China, the world's largest dollar holder. SELL SELL SELL, but try to recover profit in an alternative currency. It will mean nothing to profit into a worthless piece of paper.