Higher U.S. Dollar
Traders are expecting a higher U.S. dollar versus a wide range of currencies. This is because the United States Federal Reserve is expected to raise interest rates. A FT.com article entitled Transatlantic splits push dollar higher notes that
Investors are chasing the US dollar to new highs against a broadening range of currencies, as markets adjust to the diverging outlook for the world’s major economies and the prospect of interest rate hikes by the Federal Reserve. The dollar hit a six-year high of Y106.39 against the yen on Tuesday and climbed to its highest level in 14 months against a basket of currencies.
The article notes that a weakening Eurozone economy is helping a higher U.S. dollar as well.
Higher U.S. Dollar and Emerging Markets
A higher interest rate structure in the USA often causes investors to take money out of third world currencies. Since the recently higher U.S. dollar the Mexican peso, South African Rand and Turkish lira have suffered especially. Reuters reports that Latam currencies drop on US rate outlook. The list of recently fallen Latin currencies include the Brazilian Real, Mexican peso, Chilean peso, Colombian peso, Peruvian sol and Argentine peso.
Latin American currencies weakened on Tuesday as investors changed their outlook on U.S. interest rates, while Brazilian markets also reacted to a warning from Moody’s on the outlook for the country’s credit rating.
Trading a Higher U.S. Dollar
Is the dollar going up more or has it peaked? The Forex market often reacts to anticipated events, in this case higher US interest rates. The old saying is to buy when there is speculation and sell when the news hits. But interest rates may not be all there is to the higher U.S. dollar. The U.S. economy continues to strengthen while Europe (minus Germany) weakens. Japan is intentionally weakening the Yen in order to sell more products abroad. There is a lot of chaos in the world with civil wars in Ukraine, Syria and Libya. An Islamic terror group is trying to establish a government with Sharia law in the hinterlands of Syria and Iraq and having some success. And the worst ever outbreak of Ebola virus threatens to come to more than 20,000 infected people and probably 10,000 fatalities in West Africa. If this virus manages to escape into the more chaotic regions of the world the results would be hellacious. A recent New York Times editorial is entitled From Bad to Worse with Ebola.
The widening epidemic of Ebola in West Africa looks worse with each passing day. The outbreaks in the hardest-hit countries – Guinea, Liberia and Sierra Leone – have outstripped the ability of humanitarian groups and fragile government health systems to treat the sick and slow the spread.
A panicky effort to quarantine a large slum in Monrovia, Liberia, using troops to keep people penned in, proved a disastrous failure that probably made things worse.
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6. By : http://www.theforexnittygritty.com/forex/higher-u-s-dollar
Investors are chasing the US dollar to
new highs against a broadening
range of currencies, as markets
adjust to the diverging outlook for the
world’s major economies and the
prospect of interest rate hikes by the
Federal Reserve.
14. By : http://www.theforexnittygritty.com/forex/higher-u-s-dollar
Latin American currencies weakened
on Tuesday as investors changed
their outlook on U.S. interest rates,
while Brazilian markets also reacted
to a warning from Moody’s on the
outlook for the country’s credit
rating.
26. By : http://www.theforexnittygritty.com/forex/higher-u-s-dollar
The outbreaks in the hardest-hit
countries – Guinea, Liberia and
Sierra Leone – have outstripped the
ability of humanitarian groups and
fragile government health systems to
treat the sick and slow the spread.