Hi Traders,
I want to share with you some selected parts from an articles explaning the reasons of the weak performance of the $ during 2017 and we can expect that 2018 will not be better for the greenback,
Quote,
..., Last year, the U.S. dollar lost 10 percent against the euro and 5.5 percent against the renminbi. It was the second worst performer among major currencies after the New Zealand dollar, and its drop was the steepest in more than a decade despite three interest rate hikes and the passage of Trump's tax reform, which could logically be expected to drive the dollar's value upward. This happened for a complex set of reasons which may include the dollar's popularity as a funding tool for foreign companies and governments, but Trumps's effect on his country's global standing must be a key driver of the dollar's decline.
..., Countries were more likely to hold reserves in the currencies of their defense pact partners, even when purely economic choice would have dictated otherwise. The same is still true, with a nuclear-era twist. Nations such as Japan and South Korea, dependent on the U.S. for security, hold a greater share of reserves in dollars than France, Russia or China, which possess their own nuclear deterrent,
..., The dollar’s dominance as an international unit is buttressed by the country’s role as a global power guaranteeing the security of allied nations. If that role were seen as less sure and that security guarantee as less ironclad, because the U.S. was disengaging from global geopolitics in favor of more stand-alone, inward-looking policies, the security premium enjoyed by the U.S. dollar could diminish. Our estimates suggest, in this scenario, that $750 billion worth of official U.S. dollar-denominated assets – equivalent to 5 percent of US marketable public debt – would be liquidated and invested into other currencies such as the yen, the euro or the renminbi.
..., Trump, of course, has spoken out in favor of a weak dollar because it helps trade competitiveness. But the U.S. currency is not weakening because of any consistent policy. On the contrary, it's Trump's loose cannon behavior that's undermining it. An unhinged Mars is beating up Mercury in a fit of fire and fury.
End quote,
Source : www.bloomberg.com/vi...-for-the-weak-dollar
If you found this usefull to you please like, please comment,
Best Regards
Omar
I want to share with you some selected parts from an articles explaning the reasons of the weak performance of the $ during 2017 and we can expect that 2018 will not be better for the greenback,
Quote,
..., Last year, the U.S. dollar lost 10 percent against the euro and 5.5 percent against the renminbi. It was the second worst performer among major currencies after the New Zealand dollar, and its drop was the steepest in more than a decade despite three interest rate hikes and the passage of Trump's tax reform, which could logically be expected to drive the dollar's value upward. This happened for a complex set of reasons which may include the dollar's popularity as a funding tool for foreign companies and governments, but Trumps's effect on his country's global standing must be a key driver of the dollar's decline.
..., Countries were more likely to hold reserves in the currencies of their defense pact partners, even when purely economic choice would have dictated otherwise. The same is still true, with a nuclear-era twist. Nations such as Japan and South Korea, dependent on the U.S. for security, hold a greater share of reserves in dollars than France, Russia or China, which possess their own nuclear deterrent,
..., The dollar’s dominance as an international unit is buttressed by the country’s role as a global power guaranteeing the security of allied nations. If that role were seen as less sure and that security guarantee as less ironclad, because the U.S. was disengaging from global geopolitics in favor of more stand-alone, inward-looking policies, the security premium enjoyed by the U.S. dollar could diminish. Our estimates suggest, in this scenario, that $750 billion worth of official U.S. dollar-denominated assets – equivalent to 5 percent of US marketable public debt – would be liquidated and invested into other currencies such as the yen, the euro or the renminbi.
..., Trump, of course, has spoken out in favor of a weak dollar because it helps trade competitiveness. But the U.S. currency is not weakening because of any consistent policy. On the contrary, it's Trump's loose cannon behavior that's undermining it. An unhinged Mars is beating up Mercury in a fit of fire and fury.
End quote,
Source : www.bloomberg.com/vi...-for-the-weak-dollar
If you found this usefull to you please like, please comment,
Best Regards
Omar
