gunsandgold

Time To Hedge Dollar Exposure

Interest rates are the main factor in currency strength. US will not be cutting rates, Europe hasn't even started to cut, they are way behind, and will need to cut dramatically to stimulate their rapidly slowing economy. The reason the dollar rallied so strongly since July is because the prospect of US raising rates due to inflation diminished due to the drop in demand for oil and the commodity bubble deflating. Europe resisted cutting due to inflationary pressure which should not be a concern in a global slowdown. They most surely will be cutting rates going forward, while the US is already finished. The deficit is a factor but interest rates drive currencies. The Euro peaked in July, until the interest rate situation changes.