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Thread: USD vs Euros... what should one do?

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    Default USD vs Euros... what should one do?

    The USD vs the Euro hasn't been looking so hot:

    PARIS (Reuters) - The U.S. economy lost the title of "world's biggest" to the euro zone this week as the value of the dollar slumped in currency markets.
    http://www.reuters.com/article/idUSL1491971920080314

    Venezuela, Latin America's leading petroleum producer, has previously backed Iran's proposals for OPEC to abandon the dollar and use the euro for oil pricing. But the Organisation of Petroleum Exporting Countries has rejected the idea, at least in the short-term.
    The head of the journal Petroleum World, Elio Ohep, said the shift to euros was "good business" for Venezuela.
    http://uk.news.yahoo.com/afp/2008031...e-5268574.html

    Some people think the Euro is a bit overvalued though...
    Our conclusion is that we continue to consider it premature to turn fundamentally bullish on the dol-
    lar, but also that a downturn in the euro is steadily approaching. An asymmetric bias probably pre-
    vails, where the USD may benefit more from good news and suffer less from bad news than the euro.
    • Our forecast remains one of a move to 1.52 within 3 months and 1.40 before year-end, though in-
    creasingly a move above 1.50 may become difficult to achieve.
    http://danskeresearch.danskebank.com/link/eurusdwherenext0208/$file/eurusd_wherenext_0208.pdf
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    Default Re: USD vs Euros... what should one do?

    everything depends on the relative commitments of Ben Bernakke versus Jean-Claude Trichet on the priorities of maintaining economic growth versus containing inflation. My gut feeling is that we'll see 1 Euro = US$1.70 before the end of the year.

    The 'tin foil hat' crowd is of the opinion that investors wishing to 'protect their wealth' in a scenario of new US dollars being printed and devalued in order to rescue ARM mortgage holders and rescue the financial institutions holding their ARM mortgage debt are far better off investing in Swiss Francs rather than Euros. This is based on logic that goes along the lines of European banks and corporations being just one step behind American banks and corporations in regard to fallout from US ARM mortgages / US currency devaluation. As such, they speculate that Trichet will have no choice but to inflate the Euro to keep pace with the US dollar in order to protect European corporations and jobs.

    For a recent example, Airbus is already praying that the Boeing challenge to the US gov'ts order for new tanker aircraft will succeed ... because with the 5% US dollar devaluation that has already taken place since the contract was written a few weeks ago comes straight out of Airbus' profit margin (they must sell in dollars but buy components and pay workers with euros). If the Euro strentghens to US$1.70 before the new planes can be delivered, Airbus is likely to lose money on the deal !
    Last edited by Melonie; 03-16-2008 at 08:18 AM.

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    Default Re: USD vs Euros... what should one do?

    The dollar has weakened but I think it will correct itself once again... I also think the Euro is quite a bit overvalued, especially with some of the current failing economies that use the Euro.

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    Default Re: USD vs Euros... what should one do?

    What is your question? Yes, the dollar is weak. I have a family member getting paid in pounds right now. Now THAT is the shit as they have been able to aggressively payoff some debts.

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    Default Re: USD vs Euros... what should one do?

    Quote Originally Posted by Melonie View Post

    For a recent example, Airbus is already praying that the Boeing challenge to the US gov'ts order for new tanker aircraft will succeed ... because with the 5% US dollar devaluation that has already taken place since the contract was written a few weeks ago comes straight out of Airbus' profit margin (they must sell in dollars but buy components and pay workers with euros). If the Euro strentghens to US$1.70 before the new planes can be delivered, Airbus is likely to lose money on the deal !
    I'm pretty sure these new aircraft will be built in Alabama so Airbus will be paying workers in dollars.

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    Default Re: USD vs Euros... what should one do?

    Quote Originally Posted by Katrine View Post
    What is your question? Yes, the dollar is weak. I have a family member getting paid in pounds right now. Now THAT is the shit as they have been able to aggressively payoff some debts.
    No question - just sharing I don't personally have any currency risk at the moment. Taking a currency swap position is slightly tempting though...

    Getting paid the same numbers in a more valuable foreign currency does rock, hey
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    Default Re: USD vs Euros... what should one do?

    TOKYO (AFP) - World markets suffered fresh turmoil Monday as investors dumped both stocks and the dollar on fears more US banks could be vulnerable to the credit crisis that crippled Bear Stearns, dealers said.
    http://www.afp.com/english/news/stor...c8a7e.211.html

    March 17 (Bloomberg) -- The dollar fell below 96 yen for the first time in 12 years after the Federal Reserve's emergency weekend cut in its discount interest rate and the sale of Bear Stearns Cos. to JPMorgan Chase & Co.
    http://www.bloomberg.com/apps/news?p...0zo&refer=home
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    Default Re: USD vs Euros... what should one do?

    Quote Originally Posted by person View Post
    Taking a currency swap position is slightly tempting though...
    After these comments, the dollar fell to record lows relative to other currencies -- the lowest ever against the euro, the lowest in a generation against the British pound, and the lowest in 57 years against the Canadian dollar.
    http://www.globalresearch.ca/index.p...xt=va&aid=8718

    I'm not seeing record lows against the Canadian Dollar or the GBP... maybe there's massive intraday movement not on these charts? Hrm.
    http://finance.yahoo.com/currency/co...EUR&amt=1&t=2y
    http://finance.yahoo.com/currency/co...CAD&amt=1&t=2y
    http://finance.yahoo.com/currency/co...GBP&amt=1&t=2y
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    Default Re: USD vs Euros... what should one do?

    some strange things have been happening re currency exchange rates lately ... coinciding with the latest G7 meeting ! Keep in mind that a tanking dollar not only means that Americans can't afford to buy imported items, but also that the exporters of those items can't sell them profitably. Thus the Japanese, the Germans etc. have a huge stake in propping up the US dollar.


    (snip)"This amazing infusion of Federal Funny Money™ is truly historic. This is Bernanke's infamous helicopter crew going 'whap-whap-whap' as they fly over the banking system, dumping dollars into bankrupt bank vaults. The bankruptcy of the entire system is painfully obvious. So why isn't there a global run on American banks?

    This is very simple: ALL nations have trade surpluses with the US. Not one of them wants this to stop. The US certainly has been egging China into stopping this. We should be happy they choose not to do this...yet. Instead, we saw a series of hysterical meetings by the G7 nations to figure out how to save the bankrupt US system while at the same time, lying about the solvency of the system. The US Federal Reserves has virtually no reserves compared to nearly any nations on earth. Tiny principalities have bigger international reserves than the Federal Reserve! This is utterly irresponsible. But the arrogance of the system is this: we make up Federal Funny Money™ out of thin air. And all our trade partners agree to accept this FFM™ as 'real money with real value' since this benefits them greatly and kills us.

    Of course, any time a nation plays this game, they see sharply increasing inflation. And voila! Here it is! As usual, it always shows up first in food and fuel, the necessities of life no one can easily escape. If the price of microwaves rises, we can simply not buy one. But freezing to death or starving to death is very problematical. As usual, when inflation of necessities rises rapidly, we see an increase in spending because people buy new energy systems to get more efficiency and they replace gas guzzlers with more efficient cars. This gives the illusion that commerce is picking up and is OK. But the rulers know this game, they understand perfectly well, how this cycle works.

    We are now nearly done with the 'improve all systems' part of the inflationary cycle. Now we are in the 'everyone has to cut back all discretionary spending' part of the cycle. This is where the many lay-offs and offshore work bites the working classes very hard. Job losses soar. Bankruptcies soar. Already, many Americans are unable to pay their mortgages and their credit outstanding. The collapse of the ability of the working class to pay their debts has just begun, not ended. The stock markets shot up on the imaginary belief that the collapse of our economy has been stopped by creating massive inflation.

    As I go about, doing my business, I see naked fear on the streets. I see, in the stores, befuddlement and pain as people try to find ever-cheaper food. At the pump, there is rage. The news media doesn't tell us that the Federal Reserve's rescue plan is to kill us with inflation. This raid on all savers is theft. And few people in our government dares mention this. Interest on savings has collapsed. But not on bonds. And as the bankers recharge their bottom lines at the expense of savers, we get a worsening of this historic condition: the collapse of savings in the G7 nations. Replacing debt for savings means inflation! And the chart above shows us that over a trillion dollars in debt was made based on nothing except the value of the entire USA. And these bonds are chains that will lead us into slavery."(snip)

    from

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