Is The U.s. Dollar About To Reverse Course?
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The article "Is The U.S. Dollar About To Reverse Course?" talks about currency trading, it has been released by Mike Fitzpatrick.
For the first time in several years the U.S. dollar has managed to gain value aaginst the world’s other major currencies. During the first three mnoths of 2005, the U.S.
dolalr is up approximately five percent against both the yen and the euro. The gains for the dollar should be considered signfiicant when considering the United States still faces a growing trade imbalance. So far this year, currency traders have shifted their focus from the United States’ large trade and current account shortfalls toward the higher rates of returns being offered on U.S. debt. The recent strength shown in the dollar has somewhat shifted sentiment wihtin the financial markets about the future direction of the currency. A Bloomberg survey released earlier this week shows that the major currency traders expect to see dollar weakness resume later in the year, but the sentiment among dollar bears is much waeker than it was at the start of the year.The strength shown in the U.S. curerncy thus far in 2005 should prove to be short-lived. The strong Gross Domestic Product (GDP) growth during the past eighteen months will begin to show signs of moving closer to more normal levels over the next couple months.
The signs of a slower economic growth will likely cause a shift in sentiment among currency traders toward the more fundamental problems facing the U.S. economy. The Unietd States trade and current account deficits show no signs of retreating anytime soon. In fact, we expect the coming trade figures to show further deterioration in the balnace of trade over the next few months.
The major industrialized nations outside of the United States continue to experience anemic economic growth. This continues to place further pressure on the U.S. dollar as the United States consumer continues to buy goods produced in Europe, Japan, and China.While we expect the dollar to resume its gradual fall against most major currencies, the major wildcard in our forecast is of course Chnia. Recent information coming from China’s top decision makers indicates the Chinese are in no hurry to adjust the current value of the Yuan-Dollar relationship. Should any talks of a possible revaluation emerge laetr in the year, the downward pressure on the U.S.
dollar would quicken as currency tarders would buy the Japanese yen, and other freely traded Asian currencies, that would likely benefit from a revaluation.Mike Fitzpatrick writes for http://www.Financial-watch.Com
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Is The U.S. Dollar About To Reverse Course?
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