Sunday, June 8, 2008

No turnabout in sight for the dollar

The dollar is again in stormy weather after a for many after a ominous speach from Jean-Claude Trichet. After last weeks historic rise in the price of oil, Trichet is not excluding a interest rate rise in July. This interest rate policy is the opposite of the U.S. and will cause major trouble for Treasury minister, Henry Paulson who has expressed his political will to have a stronger dollar, especially to the euro. A dollar, not likely to turn on a penny or even on a zimbabwian billion dollar bank-bill. The last years falling dollar has made many to doubt the dollar as a standard currency in international trade.

As you can see at this picture, the primary trend is upwards for the Euro/dollar index and I can't see where it would stop with Federal Reserve's current policies.

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