Can the world tolerate a weak dollar?

Dispassionate · Dec 3, 2006

... following on from my yuan peg debate.....

US accounts for 35% of world's GDP, can the world tolerate a lower US dollar without sending everyone else into recession?

counter_violent · Dec 3, 2006

Dispassionate said:
... following on from my yuan peg debate.....

US accounts for 35% of world's GDP, can the world tolerate a lower US dollar without sending everyone else into recession?

No, so buckle your seat belts, oh what fun it's going to be, and the unprepared will suffer the most, as with everything.

andycan · Dec 3, 2006

let me throw a spanner in the works
dollar should find a low and start moving up

jacinto · Dec 3, 2006

andycan said:
let me throw a spanner in the works
dollar should find a low and start moving up

I should agree with you all the way, the question is where and when...............

next FOMC is a start

when fed surprisingly

raises rates?

counter_violent · Dec 3, 2006

jacinto said:
I should agree with you all the way, the question is where and when...............

next FOMC is a start when fed surprisingly raises rates?

The consequence of any fed rate rises will kill housing market and erode consumer confidence and the equity markets will at the very least make a correction.

The problem is , it's already begun.....some have noticed already....and some have not !

jacinto · Dec 3, 2006

counter_violent said:
The consequence of any fed rate rises will kill housing market and erode consumer confidence and the equity markets will at the very least make a correction.

The problem is , it's already begun.....some have noticed already....and some have not !

hence the "where and when".............

the market and the fed have dissociated views, and they will have to come to be the same at some point,

where, i dont know,

when i also dont know

......i only know the fed holds a card the market doesnt :cheesy:

jacinto · Dec 3, 2006

counter_violent said:
The consequence of any fed rate rises will kill housing market and erode consumer confidence and the equity markets will at the very least make a correction.

The problem is , it's already begun.....some have noticed already....and some have not !

On the counter, bernanke HAS to make himself a reputation with the markets if inflation is high and beyond his (and the FEDs) acceptable levels, and on top, there are no politics in between (election is passed).

Isn't he a promoter of inflation targetting

I dont hold this opinion myself, but it is something to think of IMHO

andycan · Dec 4, 2006

jacinto said:
I should agree with you all the way, the question is where and when...............

next FOMC is a start when fed surprisingly raises rates?

im from the camp that believe that markets move and the news follows not the other way round
so with that said FOMC could be the catalist which may make the masses believe in the change in direction
eye balling the dollar index we are close to a low

Dispassionate · Dec 4, 2006

andycan said:
im from the camp that believe that markets move and the news follows not the other way round
so with that said FOMC could be the catalist which may make the masses believe in the change in direction
eye balling the dollar index we are close to a low

Agree with this one. Everyone always curve-fits the explanation to whatever has happened. It's just hindsight bias! Everyone is ALWAYS obvious AFTER the event!

In the forex markets there almost is not truth becasue the truth is so hard to see. It's hard to see becuase forex markets are so complicated (which is why so many "experts" get it wrong! The only thing that counts is price and trend.

anley · Dec 4, 2006

Yes, the world can easily handle a lower dollar. Look at it on a long term chart it's been far lower in the past than it is today and we're all still alive

.

Yes, I do admit that the global economy is different now from x number of years ago but humans and economies will always adapt - they have to......

PS. Who's to say it doesn't rally significantly from here. Stranger things have happened and never forget that a 'market never looks as bad as when it's on its lows'......

chump · Dec 4, 2006

"that markets move and the news " ..of course they do. Smart money is also collectively big money and in general it doesn't want to move fast as that leads to market displacement. It compensates for this by ANTICIPATING which often means that by the time news arrives to explains some form of market move ..it's not too late ,but it is later in terms of price risk.

One of the things I don't like about this dollar move from now on is it's transparency. Any weakness in the dollar will have a lagged effect in the UK and Europe. I've heard it won't ,but I don't believe I've yet also read a convincing and factually based reason for that scenario. In the past the US dominoe carried everything with it and I see no reason to expect that to be different now. Let me clarify that , on a probability basis I expect it to be that way and to move accordingly.

counter_violent · Dec 4, 2006

chump said:
"that markets move and the news " ..of course they do. Smart money is also collectively big money and in general it doesn't want to move fast as that leads to market displacement. It compensates for this by ANTICIPATING which often means that by the time news arrives to explains some form of market move ..it's not too late ,but it is later in terms of price risk.

One of the things I don't like about this dollar move from now on is it's transparency. Any weakness in the dollar will have a lagged effect in the UK and Europe. I've heard it won't ,but I don't believe I've yet also read a convincing and factually based reason for that scenario. In the past the US dominoe carried everything with it and I see no reason to expect that to be different now. Let me clarify that , on a probability basis I expect it to be that way and to move accordingly.

Precisely chump. It's as plain as day for anyone who understands price dynamics. Mr Charts shows a good example over on the trend angle thread. Thankfully his description of the event is incomplete

he nearly gave the whole game away

andycan · Dec 4, 2006

81.70 would be the ideal low as for timing not sure not really looked into it
as i dont trade it but i do euro and thats getting toppy

Can the world tolerate a weak dollar?

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