Why is USD taking a beating in the Forex Markets?
Does anyone know why the USD (U.S. Dollar) has been taking such a beating in the Forex Markets lately? It has been losing ground to the Japanese Yen, Euro, and the British Sterling. What’s the deal? Does anyone know when this will end? This is seriously screwing up my Forex investment strategies.
The USD dollar is having problems for a couple of reasons. First, there is concern over the status of the US economy in general. We have a war going on that continues to ring up a large bill that will have to be paid by the US taxpayers sooner or later. We have a gazillion and a half baby boomers moving into their "golden years" that is predicted to put massive strain on already questionable social security and healthcare resources. And we have an consumer base that was heavily leaning on housing appreciation as a stimulus for the economy.
Now on top of that challenging set of circumstances we have an international community discussing the replacement of the USD as the primary trading currency in the foreign exchange marketplace. Remember all countries currently have to convert to USD to buy and sell oil and other commodities. What if this were to be slowly replaced with the Euro? or a new Middle Eastern currency like an Oily or some such? or what about the Yuan, rumor has it these guys are packing some serious weight these days.
Couple all this with a US political machine which is more concerned with "he said…..she said….partisan politics" as opposed to focusing on developing a sound economic foundation upon which our country can grow and self sustain……and you then have the most troubling situation for any Forex currency…..uncertainty!
That being said the US still has a lot going for us. The USD is not going to implode over night (at least I hope not). I have most of my clients currently positioned in long term hedging strategies that will perform nicely whether the USD goes up or down.
May all your guesses be good ones.
Paul