OK money guys.. Mike answer this

[OUHOMER]

Why is the dollar getting stronger????????? Seems it would be getting weaker to me...

Maybe that's why i am broke:confused:

[Frozen Sooner]

Haven't been paying attention as much as I should to answer this question, but I'd guess a couple of factors:

1. Oil demand destruction
2. The weakened dollar led to an increase in exports.

Both will affect the balance of trade positively, which strengthens the dollar.

In addition to these factors, the Fed kept interest rates steady a week or so ago contrary to expectation. Dollars were likely bid down in anticipation of a rate decrease, so they're bidding back up.

[Vaevictis]

I'm in agreement with Mike; it may not be the whole reason, but it's certainly part of it.

Essentially, when you import less oil, you're decreasing the amount of dollars you're exporting -- in essence, reducing supply. When you export goods, folks overseas have to buy dollars to pay for them -- which increases demand.

Increasing demand and decreasing supply yields an increase in the strength of the dollar.

[tommieharris91]

What I also find counterintuitive is that the ECB kept rates unchanged today. I would think that makes the euro stronger, because I thought they would be cutting rates.

Also, another reason behind euro weakness is that they cannot possibly bail out the eurozone all at one. Since there is no chance of that, the eurozone could go through more troubles than we are right now. This weakens the euro, and also makes the dollar stronger against it.

[OUHOMER]

Thanks, I was just wondering why it was up. Mexican peso is up as well.

[Chuck Bao]

I think it is more the fact that currency traders are realizing that Europe is in almost as much of a financial mess as the US.

Asian sovereign funds and Middle East petro dollars are doing what they know best, balancing the international flow of funds and protecting their largest export market.

If you were an international fund manager, what would you do with your funds, especially now that commodity prices are weakening?

Don't forget that the US Fed has been making billions and billions of dollars available overseas, which indicates that there is demand, just lack of trust in US financial institutions.

Like the stock market, the currency market is very short term.

So, do not take this as an indication of a longer term trend. I still believe that the dollar will start weakening again long term.

[StoopTroup]

Now that it's stronger...

Does that mean I can buy more Lotto tickets with it?

[Frozen Sooner]

Sure. As long as they're EuroLotto tickets.

[Penguin]

To help out the economy, I have begun printing out $20 bills.


Let me know if you need some.

[Curly Bill]

To help out the economy, I have begun printing out $20 bills.


Let me know if you need some.

yes please :D

[FaninAma]

Why is the dollar getting stronger????????? Seems it would be getting weaker to me...

Maybe that's why i am broke:confused:

The main reasons are that the FED and the European Central Banks are buying USD futures and selling precious metals futures.

The Chinese are buying USD futures in return for the US buying back the bad mortgages they bought from US banks via the bailout plan. http://market-ticker.denninger.net/archives/2008/09/30.html

The flight to safety, ie US Treasuries helps the USD.

The Europeans CBs are strongly hinting that they will lower interest rates(about time) which strengthens the USD.

Make no mistake about it, the FED, the US Treasury and the European/Asian CBs have circled the wagon around the USD. They know if it fails their fiat currencies aren't far behind.

But, if we are to escape this current mess without a major depression the USD WILL fall significantly in the ensuing hyperinfationary monetization of the nation's debt mountain.

[tommieharris91]

To help out the economy, I have begun printing out $20 bills.


Let me know if you need some.
Well, if a deflation scenario happens, the Fed and FBI will allow you print $20s.

If that happens, your best investments would be mason jars, firearms, and ammunition.