User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Thursday April 2, 2009 - 13:30:42 GMT
FX Solutions - www.fxsol.com

Share This Story:
| | Email

Inflation Abroad--The US Dollar Overseas



By Joseph Trevisani, Published: 4/2/2009
 
The view from a jetliner at 30,000 feet can be clarifying. So the view of the American economy and its prospects from abroad can be instructive.

From overseas the latest Washington political gaffe or media outrage doesn't even make it to translation. No one in Saudi Arabia, where I have been for a week, asked me if I thought the Democrats or Republicans were responsible for the AIG bonuses. Perhaps it was simple courtesy, but more likely it was not considered important enough to discuss. That people with government power serve people with financial power is not seen as worthy of comment, except maybe with a shrug, 'that's the way things work'. But that is not to say people are unaware of the politics and actions of the United States. It is just that their concerns are sharpest for the policy questions that affect them the most. The view from overseas, like that from an airplane, only catches the major formations, the economic policies that have the consequences to reach across oceans.

Three topics came up again and again in the questions I was asked: is the US banking system stable? Will the American government succeed in reviving the economy? Will US fiscal and monetary policies devalue the dollar?

Saudi Arabia's banks and financial system were relatively untouched by the hurricane that struck Western finance last fall. The Kingdom's banks had not bought debilitating amounts of asset-backed and mortgage-backed securities during the boom. Naturally conservative, the banks are now in a position to help the government when it supports the economy rather than require their own bailout.

But no bank exists in isolation. When panic strikes the world financial system everyone suffers. The United States is still the largest component of world finance. None of the world's banks can be secure, even in their own country, if US banks, especially the money center banks, are staggering. Although many, perhaps most, banks around the world would survive a US bank collapse, the risks would be enormous. The negative effects on economic growth might linger for a decade. After the events of last fall, the dependence of the world financial system on confidence has never been more evident. The determination of the Federal government to insure that the US banking system continues to function has never been more important.

In the run up to the financial crisis last summer, the fashionable discourse was whether various areas of the world economy, primarily the EU and China, were 'decoupled' from events in the United States. Could these large economic blocs continue to prosper without the US? No one is asking that question now.

The world economy will have a very difficult time recovering if the US is not leading the way. It is not the details of the Obama administration's stimulus plans that interested my questioners in Saudi Arabia, but a more basic consideration, will they work? In the US, a common idea is that by 2010 the economy is likely to be recovering on its own regardless of the stimulus bill. But the view from abroad is much simpler, returning growth is the point, not the method by which it is achieved. If economy is growing in 2010, even poorly, the Obama administration will get the credit.

Probably the greatest concern of the people I spoke with was for the inflationary potential of the US government's fiscal policies and the Federal Reserves' new quantitative easing policy. An often expressed idea was that the government was creating debt on one hand and buying it with the other; a sleight of hand that did not impress my interlocutors.

US Government debt is about to skyrocket. The easiest way to reduce the debt burden on future generations is to inflate it away. I encountered a good deal of skepticism of the idea that when the time is appropriate, the Fed will withdraw the excess liquidity from the economy. The suspicion is that when the Fed and the US government have to choose between no growth and low inflation and higher growth and higher inflation, they will choose the second every time.

The Saudi Riyal is pegged to the dollar and Saudis have just witnessed the inflationary effect of a weak Dollar on their economy. If the peg remains, US inflation is a direct import to the Kingdom's CPI. In addition, oil is priced in dollars. Though it is improbable that an inflationary Dollar would prompt another massive speculative bubble, the damage that a high oil price would do to the world’s economy in its weakened state would be substantial. A weak Dollar will also revive pressure for the alternative pricing of oil in Euros.

Lastly, the Saudi Government is one of the world’s largest holders of US Government debt. US Treasuries are a low return, low risk instrument. With inflation, that all changes. Not only does the value of those low returns diminish under inflation but the returned principle is also devalued. The prospect of inflation is probably the greatest threat to the continued investment of foreign governments in US sovereign debt.

If the Dollar has remained the central currency in the world’s economic system it is because there is no genuine alternative. Governments that might prefer, in their ideal world, to strip the US of the economic advantages provided by the Dollar have to resort to speculation about the arcane qualities of the IMF's Special Drawing Rights (SDR) just because there is no credible alternative.

To the Saudis and the world it will not matter why the US banking system remains stable, only that it does. The world will not care what happened to US capitalism if large banks are nationalized but only that the US and the world financial system functions. Likewise for the US economy. No one overseas will look askance if it is government spending and not tax cuts that revives the economy. But if deficit spending and quantitative easing destroys the value of the US dollar, the US currency will lose its reserve status and no one will care that it was for the best intentions

 

Forex Trading News

Forex Research

Daily Forex Market News
Forex news reports can be found on the forex research headlines page below. Here you will find real-time forex market news reports provided by respected contributors of currency trading information. Daily forex market news, weekly forex research and monthly forex news features can be found here.

Forex News
Real-time forex market news reports and features providing other currency trading information can be accessed by clicking on any of the headlines below. At the top of the forex blog page you will find the latest forex trading information. Scroll down the page if you are looking for less recent currency trading information. Scroll to the bottom of fx blog headlines and click on the link for past reports on forex. Currency world news reports from previous years can be found on the left sidebar under "FX Archives."



Elevate Your Trading With The Amazing Trader!

The Amazing Trader includes:
  • Actionable trading levels delivered to YOUR charts in real-time.
  • Live trading strategy sessions.
  • Market Updates with Trading Tools.

Register To Test Your Amazing Trader


Trading Ideas for 23 October 2017

Register for the Amazing Trader

1.

Amazing Trader EVENT RISK Calendar:

Tue 24 Oct
All Day flash PMIs
Wed 25 Oct
01:30 AU- CPI
08:00 DE- IFO Survey
08:30 GB- GDP
14:00 CA- BOC Decision
14:30 US- EIA Crude
Thu 26 Oct
11:45 EZ- ECB Decision
12:30 US- Weekly Jobless
14:00 US- Pending Homes Sales
Fri 27 Oct
12:30 US- GDP
14:00 US- final Univ of Michigan

Forex Trading Outlook


Potential Trading Opportunities


  • POTENTIAL PRICE RISK: Medium Tue-- All Day Global flash PMIs. First good look at October economic performances.



  • POTENTIAL PRICE RISK: HIGH Wed-- 01:30 GMT AU- CPI. Top Inflation indicator.

  • POTENTIAL PRICE RISK: HIGH Wed-- 08:00 GMT DE- IFO Survey. Top German indicator.


  • POTENTIAL PRICE RISK: HIGH Wed-- 14:00 GMT CA- BOC Decision. No Policy Change Expected.


  • POTENTIAL PRICE RISK: Medium Wed-- 14:30 GMT US- EIA Crude. Top Weekly WTI Statistic.



John M. Bland, MBA
co-founding Partner, Global-View.com

EXCLUSIVE: Global-View Daily Trading Chart Points Updated

EXCLUSIVE: Global-View Free Forex Database updated




TRADER ADVOCACY ARTICLES

Trader's Advocate Articles..

pic

Retail Forex Brokerage Changing!

Are you looking for your first broker or do you need of a new one? There are more critical things to consider than you might have thought.

We were trading long before there were online brokers. Global-View has been directly involved with the industry since its infancy. We've seen everything and are up-to-data with recent regulatory changes.

Our Best Brokers listing section includes:Forex Broker Reviews, Forex Broker Directory, Forex Broker Comparisons and advice on How to Choose a Forex Broker

If would like guidance, advice, or have any concerns at all ASK US. We are here to help you.

SEE Our Best Brokers List

Currency Trading Tools

  • Live rates, currency news, fx charts. 

  • Research reports and currency forecasts.

  • Foreign Exchange database and history.

  • Weekly economic calendar.

Directory of  Forex trading tools

 
Terms of Use    Disclaimer    Privacy Policy    Contact    Site Map


Forex Forum
Forex Trading Forum
Forex Forum + forex rates
Forex Forum Archives
Forex Forum RSS
Free Registration

Trading Forums
Currency Forum Guide
Forum Directory
Open Forum
Futures Forum
Political Forum
Forex Brokers
Compare Forex Brokers
Forex Broker News
Forex Broker Hotline

Online Forex Trading
Forex Trading Tools
Currency Trading Tools
Forex Database
FX Chart Points
Risk/Carry Trade Chart Points
Economic Calendar
Quicklinks to Economic Data
Currency Futures Swaps
Fibonacci Calculator
Currency Futures Calculator

Forex Education
Forex Learning Center
FX Trading Basics Course
Forex Trading Course
Forex Trading Handbook

Forex Analysis
Forex Forecasts
Interest Rate Forecasts
Central Bank Forecasts

FX Charts and Quotes
Live FX Rates
Live Global Market Quotes
Live Forex Charts
US Dollar Index Chart
Global Chart Gallery
Daily Market Tracker
Forex News
Forex Blog
Forex News
Forex Blog Archives
Forex News RSS
Forex Services
Forex Products
GVI Forex
Free Trials
FX Bookstore
FX Jobs and Careers
Jobs USA
Jobs UK
Jobs Canada

Forex Forum

The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.

Forex News

The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.

Currency Trading

Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.

Forex Brokers

The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.

Forex Trading

Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.

FX Trading

Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.

Forex Blog

Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.

 

WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.

Copyright ©1996-2014 Global-View. All Rights Reserved.
Hosting and Development by Blue 105