# Euro v dollar - where to next



## ClubMan (21 May 2003)

Does anyone know where the Euro is going verses the Dollar - will the Dollar soon return and Euro fall....???

There's been over 26% increase this year......


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## endowed (21 May 2003)

*Re: Euro*

Speculating where the Euro is going versus the Dollar is a bit like speculating on the value of shares, a futile exercise, IMHO.


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## Drexxo (22 May 2003)

*I*

I, speculate, it will hover between 1.16 - 1.20.  Many say it will be 1.20 at end of year - and the US are chuffed with this for now.


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## joxerdaly (22 May 2003)

*EuroUSD*

Impossible to predict where its going as endowed has mentioned but we know a number of things.

The Bush administration seem content to see the USD go lower and help US exporters improve their bottom line.
A weakening dollar does however have a negative impact on foreign investors in the US and its well known how dependent the Americans are on outside capital. A USD freefall could prompt a rapid flight of capital out of the country.

The ECB appear to be finally waking up to the fact that the stronger Euro will hurt European exporters. It also brings fuel prices down so another rate cut is in the pipeline.

Forget inflation - the buzzword is deflation. It already exists in Japan and is not something the US or EC should be complacent about. Low rates are not enough alone to fight it. How authorities react will determine how quickly the world returns to growth. If the US is more proactive about getting things moving again then ultimately the USD will strengthen but that could take time.
(Ahh I sound like the economist that knows 1 hundred ways of making love but soesn't know any women   :0 )


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## Dowee (22 May 2003)

*Re: EuroUSD*

Obviously there is no definite answer to this but if it helps I'm aware of a alot of traders who are trading on the basis that it will fall to between 1.20 and 1.25 over the next number of months and that that will be the trigger point for it to start rising again. Once the economy starts to pick again (assuming it does) and investment in the US increases you will see it start to get stronger again.


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## Shanks1 (23 May 2003)

*Re: EuroUSD*

John Rusnak lost AIB all that money by gambling that the dollar would fall a few years back. I'd say he's feeling pretty sick in prison right now


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## Dowee (23 May 2003)

*Re: EuroUSD*

John Rusnak lost alot of money by creating false hedge transactions, not just by gambling that the dollar would fall.


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## Drexxo (27 May 2003)

*Look*

Looks like we're almost at 1.20 already... let me speculate 1.27 by the year end! ($ = IEP   )


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## tyoung (27 May 2003)

*euro/dollar*

Wrong 1.27 dollars/euro is about 1.60 dollars/IEP.

JDaly Do you think that deflation is a serious risk in fiat money system where Central Banks can just print money?  I think the real risk is inflation(in asset prices not consumer prices).
 I think there's a bubble in the bond market right now.


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## Caveat (28 May 2003)

*euro/dollar*

Hi tyoung,

Do you really believe that deflation is simply a monetary phenomonon? If it were then Japan would not be caught in a deflationaly spiral given interest rates at zero and lots of cash sloshing around. The US is suffering form excess supply and this is acting as a powerful drag on pricing leverage. The Fed is doing its best to stimulate demand via rate cuts, but it is also active in buying Treasuries and despite these activities, the Fed itself believes that disinflation (leading to deflation) is emerging as a serious threat.

Despite this, with the US set to pursue a reflationary economic policy, the $USD still looks vulnerable.

Caveat


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## Droxol (28 May 2003)

*Laff in*

We'll all be laughing when the GB pound is worth one euro sterling, we'll be splitting out sides as we get on the boat... with a fist full o' dollars.


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## Dowee (28 May 2003)

*Re: Laff in*

Anyone exporting to the US or Britain won't be laughing that much.


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## tyoung (29 May 2003)

*deflation/inflation*

Hi Caveat,
               Let me see if I get your Point. If enough entities(individuals, corporations, Governments etc) burdened by debt decided to stop spending save and pay down debt Demand would fall leading to a deflationary spiral. In that case cheap or even free money might be counterproductive. It would reduce the return on savings thus reinforcing the savings habit. This seems to be what happened in Japan.
 But surely outside of Germany(and perhaps Italy) nowhere else is near this Tipping Point.
The US Fed still has 1.25% to go and as far as I have read have not yet been buying treasuries. They have intimated that they will do "what ever it takes" which the Bond Market has taken to mean that the Fed will buy treasuries if necessary. Because of this the bond market is not playing it's usual role of inflation vigilante.
 However there's still the foreign exchange market and it seems to be voting with it's feet.
In the longerterm, an economic system based on borrow and spend should eventually fail when the debt burden gets to great. Just not yet!


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## Rubes (29 May 2003)

*Re: deflation/inflation*

Where to next? The pub - obviously


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