How low will the USD go ?

[iainmorrison2]

It still has a long way to go, I reckon by the end of the year.
to;
Cable 2.050
Kiwi .9500
Aus 1.050

Unless the Yuan delinks and Asia buys up heaps more US bonds the only way is down for the greenback,reminds me off the Status Quo track 'down down deeper and down'.. the US deficit is getting beyond reach my the minute as we speak, no one wants dollars ! thats why Bush has been told to play nice over Tsunami, more damage limitation as Iraq spirals down with no way out ??
The Kiwi is like a paper boat on a wave, we dont have the reserves to do anything without long term internal damage , so .6950 now, .7250 in a months time trending up up and away in the next 9 months to ..

Comments welcome .....

[Gryffyn]

Gates bets on US dollar fall

31.01.05


DAVOS - Bill Gates, whose net worth of US$46.6 billion ($65 billion) makes him the world's richest person, is betting against the US dollar.

"I'm short the dollar," Gates, chairman of Microsoft said in an interview at the World Economic Forum in Davos, Switzerland. "The ol' dollar, it's gonna go down."

Gates' concern that widening US Budget and trade deficits are undermining the dollar was echoed in Davos by policymakers including European Central Bank president Jean-Claude Trichet and German Chancellor Gerhard Schroeder.

The dollar fell 21 per cent against a basket of six major currencies from the start of 2002 to the end of last year.

The trade deficit swelled to a record US$609.3 billion last year and total US Government debt rose 8.7 per cent to US$7.62 trillion in the past 12 months.

"It is a bit scary," Gates said. "We're in uncharted territory when the world's reserve currency has so much outstanding debt."

US President George W. Bush is pledging to clamp down on spending to halve the Budget deficit - US$427 billion in the 12 months to September 30 - during his second term.

The Administration releases its fiscal 2006 Budget on February 7.

Gates reflected the views of his friend Warren Buffett, the billionaire investor who has bet against the dollar since 2002.

Buffett said last week that the US trade gap will probably further weaken the currency.

"Unless we have a major change in trade policies, I don't see how the dollar avoids going down," he said.

[Cooper]

Hi Iain... regarding the revaluation of the Yuan you might like to read the "Economist" article "Yuan step at a time" arguing against a repegging of the Yuan.
It's fair to say that there will be forced "agreement" over a dollar devaluation though. The US has a lot of leverage to make other countries play ball.

[zyreon]

http://www.dailyfx.com/article_rr_078.html

[iainmorrison2]

Interested in your comment 'the US has a lot of leverage to apply' ?

I cant see that in that they have the forever increasing curent account deficit and need inflow of other currencies to pay for the interest alone, countries are not buying US treasury bonds so the Greenback is falling, sure there are blips with the release of bull**** figures like confidence indexes, unemplyment data etc etc but these are mostly lies written by locals so take with a pince of salt.
the kiwi will rest for a bit at .71 but continue upwards during 05 as the greenback fails even more.

[Cooper]

Yes, but on the opposite side of that, the Greenback is being propped up so that other countries have cheap access to US markets. The size of the markets, the status of the dollar, the political power of the US govt, and the fact that the countries who are buying US debt don't really want to suffer from dramatic forex losses from a drastic dollar devaluation all need to be considered. Look at Nixon's actions in the early 70's for evidence of the leverage.

[Cooper]

The release of the bull**** figures are an effort to enable everyone to believe that everything is fine. It's a confidence trick, but as long as everyone wants to believe it, and as long as everyone thinks everyone else has enough info to believe it, then it will be the reality.

[arco]

"The worse a situation becomes the less it takes to turn it around, the bigger the upside"

George Soros

[Xerof]

For the moment it looks like the USD has gone low enough. See some earlier views on NZD.USD and AUD.USD threads. My dear friends at Black Swan Capital seem to agree:D:D

www.fxstreet.com/nou/content/106020/content.asp?menu=market&banner=bsc

open the link to have a look at chart for USD index


Xerof