Eurusd...today 1.47...1.70...then 2.00..3.00 | Forex Factory

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Eurusd...today 1.47...1.70...then 2.00..3.00

  • #1
  • First Post: Edited 6:32pm Dec 29, 2007 6:29pm | Edited 6:32pm
I have been thinking about this. Maybe the "Economical Expert Gurus" out there could throw they're 2cents into this one.

The Euro has been gaining ground towards the US. Steadily climbing and reaching the 1.50 level. I was thinking on where this could end.

Lets say it goes on and on like this (theoretically).....and one day its 1 Euro towards 3 Dollars or even more....then I thought: SO WHAT? WHAT does it matter? Theoretically the EURUSD could look like todays USDJPY (1 US = 112 Units of the other currency), but Japan is still a strong Economy in comparison to the US, even if the Japanese currency is over hundred units "away" from the US currency, it doesn't make Japan one of these Third World countries where currencies are under such Inflation that you need paper bills with several zeros onto it.

The Japanese can still afford to travel to Europe, buy Mercedeses and American Goods as well. So, the US could continue with debt accumulation and just depreciate the currency, without making a dent into the Lifestyle of its citizens. Is my reasoning wrong???

SO. What do YOU think? Would it matter? My reasoning is basically, even if we've had one day a 1 Euro = 100 US, it wouldn't change that the US IS a economic, military, intelectual and cultural world power.

Am I wrong?

Thanks for your thoughts.

Peter.
  • #2
  • Dec 29, 2007 6:55pm Dec 29, 2007 6:55pm
Don't forget that oil is quoted in USD. Also, the US economy is largely based on imports, meaning that a weaker dollar means less buying power. I don't believe that it's this simple... although there a plenty of soveign wealth funds out there waiting to keep the ship a float.

rudenstein
  • #3
  • Dec 29, 2007 7:16pm Dec 29, 2007 7:16pm
Don't think of 112yen as 112 dollars, instead think of it as 112 cents. Our currency isn't 112 times more valuable... If they had dollars in Japan it would be 1.12JPY = 1USD. Hope this helps.
  • #4
  • Dec 29, 2007 7:24pm Dec 29, 2007 7:24pm
thread opener is forex pundit...hehe
{Link Removed}]
  • #5
  • Dec 29, 2007 7:36pm Dec 29, 2007 7:36pm
japan economy has always been export based.
united states is financial and consumer based.
so dont bellieve that, a weak currency for usa is bad. if usd keep weakening usd just can enter in a period where it citizen can just get poorer.

usa cannot change it consumer based economy to export even in 1 decade.
it consumes too much and is troubled. the debt burden is just too high to allow drastic fundamental changes.

the weakened dollar is causing some relief by now through some kind of exports but when inflation starts to affect consumers the usa fall has started.
usd value is based on foreigners kindness and no one will want to have in it hands or invest in a place where income is dragged by a falling currency.

usd has not weakened much cause still many banks and goverment think its gonna rebound, if that not happens or sentiment changes for another reason. usd is gonna be sold off in mass.
then usa can not keep importing and pay it debt, then think what happens.
  • #6
  • Dec 29, 2007 11:57pm Dec 29, 2007 11:57pm
No matter what, every country is going to try and keep it's currency as strong as possible. Strong currency means strong economy. With that, I doubt that would happen as there will inevtiably be intervention at some point. On any note, your a trader?! You can profit from any movement on the currency. It sounds kind of ignorant to say, but if America's economy falls, I can make a profit from it. I'm an American, but I will still make money from our downfall if it would come about. The same goes for any other economy.
I dream, therefore I become.
  • #7
  • Dec 30, 2007 8:56am Dec 30, 2007 8:56am
Actually I have thought of this qn before and I came out with a answer.
Not sure if it is correct though. Please correct if I am wrong.

Make it simple this way. Suppose now 1 Euro = 1 USD.
Since US is a import country and like all the Mercedenz and Nokia, the US citizens are willing to buy it if it cost them 10 USD (which is equal to 10 Euros).

Now lets say the exchange rate is 1 Euro = 100 USD. The people in the US will have to pay 1000 USD to buy it (10 Euro = 1000 USD). This is alot more expensive.

Well you may say that we can print more zeros on the US money. Yes. you can do that. But this will make the money that you have right now worthless. Since 100 USD is worth only 1 USD now. I think this is wat people called inflation.

This happens in Latin America last time when the inflation is so high that when the moment employers have revenues, they pay to their employees and they immediately spent it on food before their $$ become worthless.

This makes financial planning verry difficult for individuals and companies alike and investors like financial stability. Financial statbility is the key to attracting investments from aboard. That is why the governemts and the Fed is always so coscious about inflation.

Please correct if I am wrong
  • #8
  • Dec 30, 2007 4:34pm Dec 30, 2007 4:34pm
Quoting u0301466
Actually I have thought of this qn before and I came out with a answer.
Not sure if it is correct though. Please correct if I am wrong.

Make it simple this way. Suppose now 1 Euro = 1 USD.
Since US is a import country and like all the Mercedenz and Nokia, the US citizens are willing to buy it if it cost them 10 USD (which is equal to 10 Euros).

Now lets say the exchange rate is 1 Euro = 100 USD. The people in the US will have to pay 1000 USD to buy it (10 Euro = 1000 USD). This is alot more expensive.

Well you may say that we can print more zeros on the US money. Yes. you can do that. But this will make the money that you have right now worthless. Since 100 USD is worth only 1 USD now. I think this is wat people called inflation.

This happens in Latin America last time when the inflation is so high that when the moment employers have revenues, they pay to their employees and they immediately spent it on food before their $$ become worthless.

This makes financial planning verry difficult for individuals and companies alike and investors like financial stability. Financial statbility is the key to attracting investments from aboard. That is why the governemts and the Fed is always so coscious about inflation.

Please correct if I am wrong
you are right but i guess the fed had not just much room to manouver and just cut rates to keep the economy afloat.

the scarey part is they are not looking for the cure, they are just being passive, thats bad.

what if they run out of rates for cutting? not cause the number but the crazy inflation that could jeopard economy.
  • #9
  • Dec 30, 2007 5:29pm Dec 30, 2007 5:29pm
You really believe the European Union could survive such a high exchange rate?

Wait for the first half of 2008 when the strong euro will be reflected into big european companies' statements.

Comparing the US economy to the Japanese economy makes no sense to me. They are totally different and structured in a very different way.
  • #10
  • Dec 30, 2007 5:41pm Dec 30, 2007 5:41pm
Quoting ItalianSharp
You really believe the European Union could survive such a high exchange rate?

Wait for the first half of 2008 when the strong euro will be reflected into big european companies' statements.

Comparing the US economy to the Japanese economy makes no sense to me. They are totally different and structured in a very different way.
this has been said since rate was $1.20. look now, whats make a difference.

have you watched last dangerous commentaries from ecb members, especially webber? they have expressed they are not worried about growth but just inflation.
and of course they are not going to cut rates or devalue the euro if their main concern is inflation.

i bet they are happy with euro current exchange. also they seem to give nothing for the plans of airbus migrating to other places.
  • #11
  • Dec 30, 2007 9:54pm Dec 30, 2007 9:54pm
Man what a chart...looks like it's off to the races?
  • #12
  • Mar 5, 2008 7:37am Mar 5, 2008 7:37am
Quoting ItalianSharp
You really believe the European Union could survive such a high exchange rate?

Wait for the first half of 2008 when the strong euro will be reflected into big european companies' statements.

Comparing the US economy to the Japanese economy makes no sense to me. They are totally different and structured in a very different way.
I agree to this post. One big european exporting company was already complaining that they lose 250 Million for every cent the Euro moves up.
  • #13
  • Mar 5, 2008 8:55am Mar 5, 2008 8:55am
Well it is actually very cheap to buy stuff from the US right now.

Japan's economy is strong I guess, even though their currency is low, instead of a monthly salary of $4000 they have 400000 yen for example. And it has ALWAYS been like that. It's when a currency changes value fast things happen. The dollar is going down but does salaries and prices in the US increase? Well I've heard they do but not in the same speed as the dollar lowers value. But it get's very expensive for US to import and cheap for other countries to import. And if other countries quote their products in $ and doesn't increase the prices the business in other countries won't do very well.
I'm not an expert at this but it should be somewhat correct from what I read in newspapers.
  • #14
  • Apr 13, 2008 12:57pm Apr 13, 2008 12:57pm
Quoting ItalianSharp
You really believe the European Union could survive such a high exchange rate?
European businesses are all over the world, we europeans have a HUGE number of companies in the Us..a strong euro will lesser exports, but it will favor those who want to expand outside.

I mean..a strong Euro was one of the reasons we united under a single currency in the first place. A strong Euro has been our goal for a long time..now its happening and everyone is scared to hell. I dont get it.

ps.Why did Britain refuse to join the single euro currency? Because they already had a stronger currency right in their hands.
  • #15
  • Last Post: Mar 2, 2010 4:41am Mar 2, 2010 4:41am
maybe one day.... let china freefloat CNY and you will see the dollar in a slow death.
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