Here are 5 major macro economic reasons that weigh heavily on the US dollar:
- Obama’s stimulus package – spilling lots of money into the economy – devaluation of the dollar.
- FOMC Statement – Printing $1 trillion dollars instantly – dollar devaluation yet again.
- Toxic Asset Plan – Geithner’s plan will come mostly from the public sector – more money spilling.
- Deep Unemployment in the US – Unemployment Rate is lately a bad surprise each time, currently at 8.1%, and expected to rise. The economy can’t rise without people working.
- SDR Plan – Replacing the dollar as world’s reserve currency. An option that is still on the agenda for the G20 summit next week.
But the dollar is doing fine
The world’s superpower is suffering from a huge crisis and spilling money. Yet, the greenback is showing strength. Well, America sent the whole world into recession, and will be the first country to get out of it. People are expecting that.
Hope factor: Obama brings strong hope everywhere. This hope could cause Americans to spend more, investors to feel relaxed and foreign governments to keep buying US assets. Hope, by itself won’t make the whole change, but it’s a factor that shouldn’t be neglected.
The upcoming G20 summit in Britain will be very interesting to watch.