Is it only one I remember the Strong Dollar?

Editor's Note: new low of the dollar against the euro, Do they indicate new rate cut by the Fed? Will you listen Trichet complaints in Europe about the loss of competitiveness of its businesses worldwide? To what extent the neglect of the dollar in the world achieve lower it? I can send your comments to: paola@moneyweekes.com

Is it only one I remember the Strong Dollar?

Buenos Aires, Argentina

February 28, 2008

Is the weakening dollar or the euro that is strengthened? ... Not that the euro is stronger for greater health of the economies that make up the area, but rather, is the dollar is growing weaker and weaker against the euro.

In fact, the dollar is weakening against a large proportion of currencies in the world. At least against major currencies can see the weakening of the dollar through a dollar index that measures the ratio of the dollar against a basket of currencies (EUR, JPY, GBP, CAD, CHF and SEK) . This index also reached a new low yesterday to play at 74.18.

In an article I wrote almost 15 days (http://moneyweekes.com/% c2% bfya-play-your-floor-the-dollar /), I gave my impression of the evolution of the dollar, contrary to some opinions suggested that the dollar had touched her apartment. At the moment, markets are giving me the reason and the dollar yesterday he touched a new low against the euro.

I understand that the euro to $ 1.50 was a psychological barrier, and few dared to think of a euro above that value. But the truth is that yesterday broke that barrier and the euro hit $ 1.5143 U.S. mid-day in New York.

What are you meaning the market with this behavior? My impression is that they are discounting a further cut in rates by the Fed in its desperate attempt to sustain growth, while the ECB will keep unchanged for the subject to maintain pressure on prices.

Not much to inquire about why these expectations. Data from the U.S. economy remain daunting. Yesterday the bad news in the U.S. came from the hand of new home sales (down 2.8% in January and 33.9% month-year), the biggest drop in durable goods orders in the last five months and a further decline expected in the confidence of American consumers.

And with negative data ... What else can happen to the Fed, which continue cutting rates? The same Bernanke said yesterday that idea pity to Congress saying, "It is important to recognize that risks to growth persist ... The Fed will carefully assess incoming information about the economic outlook and will act in a timely manner if necessary to underpin growth and provide adequate insurance against risks?

And analysts are rubbing their hands and expect the Fed to cut rates in mid-March, in another 50 basis points to 2.5%.

But the dollar still remains the reference currency in the world, that it has negative consequences continue to weaken as it is pushing up international prices of commodities that do not stop making new highs (the price of a barrel of Oil rose yesterday to $ 102 and gold in London was U.S. $ 964.99).

The other side of the coin shows that the euro's strength is generating complaints in the euro area countries that are most adversely affected by this situation. Is that the euro's appreciation against the dollar reduces the competitiveness of European companies. And as France had a record trade deficit of over € 39,000 million in 2007, this country was the first to make public his disagreement with the value of the euro. French government spokesman Laurent Wauquiez said after the cabinet, and while the euro touched its peak, the president, Nicolas Sarkozy, is "very attentive" to the issues of monetary policy, "the leitmotif the need to ensure that jobs are preserved. " Maybe Trichet, fearing to be insulted by the French President more seriously consider a rate cut.

Is it only one I remember the Strong Dollar? For now, it seems so. At least for a few months. So most people no longer trust the strength of the dollar. So much so, that while I was writing this I received a call from a friend to chat intentions to visit a theme uncommon among us ... I wanted to advise him on whether he should rather have their savings in euros ...

We will meet again tomorrow.

Horacio Pozzo

http://moneyweekes.com/% c2% bfsera-just-a-remember-the-dollar-strong /