Gloomy Times in the US for the Dollar

Tuesday January 25, 2011

Isn’t it amazing how one time can see a major currency doing really well on the world stage, and yet just a few months (or even days) down the line it can be a really different story.

This is what we’ve seen lately with the US dollar. The currency has really struggled to do any damage to other currencies at all, or so it seems. As we glanced at the latest currency reports prior to writing this article, we noticed that it had slid in the head to head against the Japanese yen. It was also struggling majorly against the Euro – and seeing as the Euro is hardly in Easy Street makes that news all the more amazing when you think about it.

So what will happen from here we wonder? The New Year is barely on its feet and the US dollar has not made a good start at all. We’ve only looked at its position against two other currencies here, but they are two major currencies at that. If they can make such an improvement against the US dollar, what else could happen in the near future?

Apparently most of the damage was done as a result of the poor data that has been coming out of the US. Their retail sales weren’t good and people aren’t feeling too confident about the future at the moment. Maybe half of it is just New Year’s Blues, but who knows where things will go from here?

We’ll be watching to see whether things improve for the dollar during the remainder of January and into February but we think the currency has a long way to go yet to get back to its formerly strong status. Hopefully it will improve but it is equally interesting to see how other currencies are faring at the moment. If only the British pound could try and improve its standing against the dollar while it is on its knees, we might have a topic ready and waiting for our next blog post!

But who knows – by this time next month the dollar could be looking a lot stronger again. It’s one of those things you can just never predict. But isn’t that why the currency markets are so intriguing in the first place? When the US dollar is looking poorly it’s hard to see why it should improve – not yet anyway.