By James McKee
Amid a failing national economy, growing unemployment numbers and states on the verge of declaring bankruptcy the USD is beginning is falling. Recently hitting the lowest point in six months against the Euro the USD is showing fresh signs of frailty in light of the conflict in Egypt. The forecast only worsens for the USD when you consider an economy that is largely based on military contractors such as Lockheed Martin whose contracts will be falling sharply. This means that many jobs will be lost and the US economy will likely suffer drastically since many cities are very dependent upon military bases and money.
Among other factors for the USD’s decline include a long debated and very controversial bill on healthcare sponsored by the Obama administration. The healthcare bill has not been seen as a reliever of debt and on the contrary many believe it to be the financial “straw that breaks the camel’s back” for the US economy. Republican politicians have fought hard against the bill and even won a preliminary battle against the bill in federal court, however the bill still faces the long upward journey into the United States Supreme Court.
Looming obstacles for the USD include a strengthened and invigorated Chinese economy that has set its sites on being a post-industrial nation that is a much larger player in the world’s financial sector.
With the recent addition of the Chinese Yuan as a publicly tradable currency this move has been solidified and confirmed. The US dollar still stands a chance of coming back in a big way if the United States can scale down its imports and again become a nation of exports. This will be a difficult path though with a US workforce largely being accustomed to being paid much better than their international counterparts.
Those on the forex currency exchange should of course keep an eye on the pace at which the US dollar declines. Rises in unemployment and inflation will quickly dissuade even the largest appetite for risk.
About the Author
Author is a Forex trader and financial analyst residing in Denver, Colorado. 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.
