Much awaited for the US economy, and finally realized, seems to be the bullish recovery of the dollar against other major currencies such as the GBP and the Euro.
It’s true that in the last week, the GBP has been affected by favourable economic reports, but the USD is clawing its way back to prominence on markets. The US economy has been topping forecasts and showing a steady rise while the GBP remains uncertain and the Euro is set to enjoy only temporarygains against the USD at present.
In contrast, the future of the USD looks bright. Recent signs of strong economic growth and an above expected improvement trade deficit are positive indicators for the future of the USD. Rising stocks and increased consumer spending indicate confidence and a strong potential for further recovery and growth in the US markets.
The labour market, hard hit during the recent recession, is also recovering. This means more people with more dollars to spend, and the overall result will be, not only a boost to the US economy as a whole, but also increased business for countries that supply any form of consumer goods to the US. It’s true: when the US sneezes, the world gets the flu! You just can’t ignore such an influential market!
All of this bodes well for the USD, and given the slightly stodgy performance of other major currencies like the GBP and the likely reverses expected for the Euro, it would appear that the USD is offering a strong return for bucks of any flavour.
Emerging markets are hard hit in recent months, and thus the more established, ‘safer’ markets attract more and more investors at present. The dollar risk is pretty good by most analysts’ accounts and expected gains against other major currencies should profit investors in the medium term.
The US economy certainly seems to be undergoing a recovery at present, however, certain analysts are concerned about the mixed picture the US economy presents, with certain indicators being above expected levels, while others, such as the service sector results, present a dismal picture.
In the medium term, however, the picture seems rosy with certain reputed analysts estimating economic grow.th at around 2.8%.
I’d say that the dollar is on the up, that it’s a safe bet, particularly as a hedge against volatility in your local currency ( the rupee is suffering and so is the AUS dollar and the NZ dollar). The Euro seems ok, but there are member states with serious problems that may affect the currency. The GBP seems to be likely to be stable at best, the reports on financial indicators expected this month are likely to be mixed, and although fairly stable, the GBP is not likely to give us any fireworks in the coming months.
OK, the USD is also not likely to supply us with pyrotechnics, but the recovery is fairly strong, and many investors remain bullish regarding the USD’s recovery. All in all, it’s a fairly safe bet, and might yet prove a lifesaver if you’re based on an emerging market currency!