U.S. dollar is likely to replace Japanese yen on the carry trade arena as the short currency. According to the currency pairs yield analysis, Great Britain pound, Brazilian real and Hungarian forint combined made over 17% against dollar this year, while buying those currencies against yen yielded only 9%.
Anticipated recession in U.S. is one of the reasons fueling dollars decline. Federal Reserve had to cut rates from 5.25 to 4.50 this year to ease the financial situation around the banks’ subprime lending. Housing crisis has already started to pull down other economic indicators — such as retails sales and employment statistics. High oil prices caused by the weak dollar and global instability also possess a bad influence on the U.S. economy.
All these factors make dollar any easy target for the Forex
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