Interesting article in the Wall Street Journal today (click on the title above to view the article) about the many up and down cycles the US dollar has gone through over the past 30 years. Each cycle has lasted 5 to 7 years. The dollar has veered from periods of strong growth to weakness and back to growth again.
The latest cycle started in late 2001 with the dollar's peak against the year, marking seven years into the current down cycle. The dollar began rebounding against the euro and other currencies several months ago, rallying 8% against the euro alone over the past 6 weeks. Potential explanations for the change include greater foreign capital coming to the U.S. in search of cheap acquisitons of U.S. assets, reduced U.S. commodity demand and lower relative economic growth in the Eruope. Is this the turn? We shall see.
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