Thursday, December 13, 2012

Pass the buck

The U.S. dollar must get weak as a result of the latest stance by the US Fed.

A look at the charts of two of the other major currencys shows what looks like bullish chart patterns forming. Bullish for those currencies.  If they go up we go down.... Another currency that makes up a significant part of the basket of currencies against which the US$ is weighted is the Japanese Yen. It has been getting weaker and weaker. But the Japanese have been trying to weaken their Yen for many years with mixed results.

A look at the British Pound and the Euro shows strength for those currencies. Today the Standard and Poors rating service downgraded the Pound. Can you see that massive move?!  Look closely, it is up in the right corner.... Yes! That's it!  Not so huge, huh?

Both of these currencies are poised to go much higher at the expense of the US Dollar. Timing matters, of course, and as always. A weak dollar is usually associated with an appreciation of asset prices. Perhaps not the bonds if a weak dollar contributes to inflation. Remember, inflation is a monetary phenomenon. To quote a famous economist.  Econo Mist....  sounds kind of opaque doesn't it.


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