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The usual behavior of the dollar during a crisis is to strengthen, in a ''flight to safety''. With the current crisis the reverse is happening as just about every currency I watch, the euro, sterling, the loony, the Swiss franc, the Oz dollar, and even the SA rand has been steadily gaining on the dollar as this latest crisis unfolds. The euro is likely to break through $1.40 soon for the first time in a long while, even though it has its own problems. Are we finally starting to see the end of people considering the dollar as ''safe''? Of course, a countervailing force, when there is no crisis is for the dollar to sink when oil rises, but in this crisis when oil has eased back, it has not stopped the rise of other currencies against the dollar. As an expat whose salary is in dollars, the implications of this for me are significant. For those who just vacation outside the US it is still worth watching.
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The oil crisis has escalated dramatically. We had been averaging around $3.20/ US gal since January. The price has shot up 25 to 30 cents in the past week. There are some predictions it will hit $5.00/galloon by summer. IMO, escalating oil prices after Hurricane Katrina led the downward spiral on the U.S. economy a few years ago, starting with job losses, then home foreclosures. We have only started to see a slow rebound. Now, it looks like we may been in for another economic dive.
Sorry if this news is such a downer. I hate to be pessimistic, but I don't see the economy getting any better in the foreseeable future. -
Oil prices are a lot worse in Europe. In the UK, I read that they are up to six pounds per gallon. Fortunately, in my job I have a driver, so I am not paying for gas directly, but it is up in eastern Europe, too. Thanks to Gazprom, natural gas is a good bit higher here than on your side of the pond.Comment
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There's quite a bit of speculation that the dollar will lose its status as a reserve currency. If that happens, we'll see lots of prices in the U.S. that look like European prices: oil will be the first of them. Having our currency as the reserve currency of the world has kept our prices much lower; if that status changes, Americans will be stunned."You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity." Adrian RogersComment
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No, you just saw QE2 effect and potential debt ceiling reach. If congress does not up the ceiling (it would not happen, chance are very small), the Doallar worth nothing (US as government is bankrupcy).
Jya-NingJya-NingComment
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I would agree that perhaps QE2 has some impact. The safe haven status or lack thereof definitely would seem to. As to the debt ceiling, some action has to be taken which is either raising the debt ceiling or cutting spending so that we don't go over the debt ceiling.
Anyone traveling overseas this summer would be smart to stock up on the currency of where they are going if they can do so at a reasonable rate.Comment
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If you're asking about my dollars . . . most of them have taken flight.
RCI Member Since 24-Aug-1989/150-plus Exchanges***THE TIMESHARE GRIM REAPER~~~Exchanging/Searching/SW Florida/MO/AR/IA/Consumer Advocacy/Estate Planning/Sports/Boating/Fishing/Golf/Lake-living/Retirement****Sometimes ya just gotta be a dickComment
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Well, the euro has now crossed the $1.40 level against the dollar. Sterling and just about every other currency I have looked at is also up. The Swiss franc and Japanese yen seem to the doing the best.Comment
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The Canadian dollar has benefited by the rise in oil prices and is now up to $1.029 USD.JohnComment
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Here is an interesting article on the subject:
Is the Dollar Still a Safe Haven? - SmartMoney.com
and another one:
http://www.cnbc.com/id/41943872Comment
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With our trip to Europe coming up in a few months, the Euro-US exchange rate is killing me.Comment
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The Canadian dollar WAS rising until recently. It seems to be on a bit of a nose dive lately. Just as I plan on taking 3 weekend trips to Boyne and Hershey Suites. Let's hope it goes back up in April!Comment
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Another interesting article:
Dollar?s safe-haven status evaporates William Watts's Forex Files - MarketWatchComment
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