Why is the dollar so weak?

Filed under: Major movement, International markets, Forecasts, Market matters, Commodities

The world of currency trading is a complex affair. Why is this?

Let's look at some factors that play in the minds of currency traders. First you have the strength of a given economy. If the economy is strong, its currency becomes stronger. But wait a minute. Doesn't a strong economy mean that we don't need low interest rates any longer and that now we can raise rates? Yes that's true but higher interest rates will only strengthen the currency even more.

There is a big chess game going on now as to which countries will raise interest rates first. If Europe or Canada raise rates first, their currencies will strengthen against the dollar. But as a consequence, their exports will suffer.The euro is trading at $1.4722. Many analysts expect it to go to $150.00.

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Why is the dollar so weak? originally appeared on BloggingStocks on Wed, 16 Sep 2009 18:00:00 EST. Please see our terms for use of feeds.

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