War Brings Out The Best In The Dollar😂😹🤣

Israel’s attack on Iran gave the greenback a boost after a long stretch of trouble. But the long-run prospects for the dollar don’t look good.

I remain cautious. Any near-term rally for the dollar might be wiped out in the longer term. My reasons for pessimism:

Number one, the dollar hasn’t been behaving the way economists expect. President Trump’s tariffs ought to make the dollar stronger, to adjust traded goods prices.

Number two, the dollar hasn’t been following historical trading patterns. Higher interest rates in the U.S. than elsewhere should attract money to dollars.

That difference in rates has grown this year as major central banks have cut while the Federal Reserve hasn’t.

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Meanwhile:

The economy has turned out both stronger and, so far at least, less inflationary than expected, which again should be good for the dollar. Instead, the dollar weakened steadily until the Israel-Iran flight to safety.

Number three, Trump’s abuse of allies has raised questions about how willing they are to be so reliant on dollars.

“The recent policy announcements coming out of the administration have sown doubt,” says Talib Sheikh, a fund manager at Fidelity International. “I would push back on all the running around with your hair on fire about the end of the dollar as the reserve currency [but] something that was unbelievably exceptional has become a little less exceptional.”

Number four, the U.S.’s incessant borrowing to finance both a yawning government deficit and a vast current-account deficit means it has to make itself attractive to foreign capital—either with higher rates or a weaker currency.

It’s likely that the dollar fell so fast because rising concern about the long-term role of the dollar combined with a short-term turn in sentiment on the U.S. from super-bullish after the November election to a consensus that it was time to invest elsewhere.

Even if that happens, however, the long-run prospects for the dollar don’t look good.

Remainder Of The Article: https://dpl-surveillance-equipment.com/bitcoin-and-crypto-currency/ultimate-resource-on-a-weak-strong-dollar-s-impact-on-bitcoin/