How believes change Market prices and prices change the Fundamentals
There is out their a Hypotheses about the so called “left dollar smile “ that in a negative US economic environment which the US is confronting a hard landing will be dollar positive because of the impact from the US to the rest of the world the rest of the world will suffer a hard landing to and US funds will in this environment bring back their invested foreign currencies to the US which will be dollar positive
What happens if the US economy faces a hard landing which in fact will bring down the inflation in the US (lower oil prices and more goods can be purchased for the dollar)?
If the dollar will stay at these levels it will be very difficult for the export sector in the us which will widen the current account deficit again
So their believe brought a change in the market price a stronger dollar and her comes the point the stronger dollar did change the fundamentals
because a stronger dollar is very bad a this point for the us economy the only sector which will with a strong dollar bring some relief to the us economy can only be the consumer which will have with a stronger dollar more money in the end of the day in their pocket.
But if the export sector will slower down this will have a negative impact on the overall economy in the US less employment wider current account deficit negative consumer sentiment an their fore a strong dollar is bad for the us economy and in the end in my opinion the market will realize that there is no point of holding dollar.
On the other side the strong dollar will make the impact from the US down turn to the rest of the world less stronger at the moment they profit from lower currencies which will stronger or make a less negative impact to their export sector and will be positive or less negative to their economies which in that point the US will suffer much longer and a deeper recession than the rest of the world which at the end of realizing that a strong dollar in this environment will be more negative in the US and more positive for the rest of the world the dollar will soften again
There is out their a Hypotheses about the so called “left dollar smile “ that in a negative US economic environment which the US is confronting a hard landing will be dollar positive because of the impact from the US to the rest of the world the rest of the world will suffer a hard landing to and US funds will in this environment bring back their invested foreign currencies to the US which will be dollar positive
What happens if the US economy faces a hard landing which in fact will bring down the inflation in the US (lower oil prices and more goods can be purchased for the dollar)?
If the dollar will stay at these levels it will be very difficult for the export sector in the us which will widen the current account deficit again
So their believe brought a change in the market price a stronger dollar and her comes the point the stronger dollar did change the fundamentals
because a stronger dollar is very bad a this point for the us economy the only sector which will with a strong dollar bring some relief to the us economy can only be the consumer which will have with a stronger dollar more money in the end of the day in their pocket.
But if the export sector will slower down this will have a negative impact on the overall economy in the US less employment wider current account deficit negative consumer sentiment an their fore a strong dollar is bad for the us economy and in the end in my opinion the market will realize that there is no point of holding dollar.
On the other side the strong dollar will make the impact from the US down turn to the rest of the world less stronger at the moment they profit from lower currencies which will stronger or make a less negative impact to their export sector and will be positive or less negative to their economies which in that point the US will suffer much longer and a deeper recession than the rest of the world which at the end of realizing that a strong dollar in this environment will be more negative in the US and more positive for the rest of the world the dollar will soften again