One can never be sure, because movements in exchange rates tend to take on a life of their own, but I’d say that the current strengthening of the greenback is more likely than not to be a short-term phenomenon and doesn’t mark a reversal of its longer-term weakening trend.
Raises and falls never occur in straight lines.
The fundamentals are a weak US economy, and a huge trade decifit. That should keep the currency weak for some time to come, I guess.
The euro is not a sound currency too, but the fundamentals are stronger than for the US$, as the decifits are smaller and the trade balance is not as baad.
Omni and Mr. He,
Just interested in your opinions. There’s been a lot of press lately in FT and the Asian Wall Street Journal pointing to the Yen as the next big mover. Any comments?
Curious,
CK
Fundamentals say so, so in the longer term yes.
Near-term: If people say that it will move, it might and might not. There was lots of talk about the Euro long before it made its move a year+ ago, however, the european bust in 1992/1993 was a matter of action following talk almost instantly.
When trading currencies, I would never trade against the fundamentals, so now is not the time to be long EUR and short JPY, rather the other way around.
Mr. He,
Thanks for the input. I hear what you are saying and identify with your comments about the Euro; took forever to see some light on that one!
Cheers,
CK
The yen should be set for a surge, though the Bank of Japan will be doing all in its power to intervene in the market and keep as tight a rein as possible on its appreciation. We’ve seen it heading up toward
Thanks Omni. I’ve been watching the Yen bounce around, considering exactly what you mentioned. Don’t know if I’d be inclined to put money on it, but it does seems to have potential.
CK