By James McKee – In a surprise move today the US dollar is on a breakaway path from its previous calamities against other major currencies. With figures like 1.3939 against the euro, 0.9597 versus the franc, 1.5878 against the pound, 1.0175 against the loonie, 0.9893 versus the Aussie and 0.7561 versus the kiwi, it is clear that the USD is rallying, but can this possibly last? Given the fact that many US banks are still stuck with foreclosed homes that they cannot sell, an ever exponentially increasing national debt, and skyrocketing unemployment I do not believe it can. Anything can be propped up for a time but in the end if anyone bothers to “peek around the curtain” what is inside the United States economy is not pleasant.
United States’ treasury bonds outnumber the TOTAL available money supply nearly 20:1 that means the United States is in bankruptcy twenty times over. Now, we are not alone in this quagmire, many countries are experiencing fiscal issues, however the United States currency is supposed to be the world’s money supply and stand as an example of what a currency should be worth ideally. Sadly this is far, far from the case currently and while there are certainly efforts being made in America to curb the downslide of the value of its currency there does not seem to be any simple answer to this problem. As the world watches and waits America’s debt holders grow uneasy, China for instance is beginning to invest less and less in American bonds and is moving towards other investments. China is the number one holder of American debt in the world.
So what does this spell out for the Forex currency exchange and the traders therein? It lets us know that there is going to be a correction on the horizon for the US dollar shortly and it is definitely going to be a profitable one. Given the number of available pairs it is certainly an appealing situation and one we should all be taking note of in the short term. The USD may make more gains tomorrow but I would not bet on it, watch these pairs like a hawk and be prepared to take a ride, everything which goes up must go down and USD definitely likes to fall fast, and hard. Happy trading!
Author is a Forex trader and financial analyst residing in Denver, Colorado with 5 years of experience in trading with an attitude of cooperation through education. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.