Monday, September 24, 2007 5:42:21 PM
$USD made a new all time low at 78.31 below 78.33 tweeze LT support.
It shows positive divergences, so let's see whether it will bounce up, but LT target to 76.
~~~
Not So Fast On Weak Dollar Concerns
By CNBC.com | 24 Sep 2007 | 10:54 AM ET
There's a lot of concern about whether a weaker dollar could cause higher U.S. inflation, but CNBC’s Steve Liesman says not so fast. Here, he offers a quick overview of different ways to think about the influence of the currency on the inflation process:
* The dollar is an inflation factor, not the inflation factor
* Imports make up just 16 percent of the U.S. GDP. Imports have risen as a percent of total U.S. economic activity. A lot of import growth has come from countries that have fixed exchange rates to the dollar, like China and other Southeast Asian countries, so a weaker dollar has no inflation impact from them.
* Wages are the biggest cost, not commodities or imports
Imports vs. Domestic Prices
A look at the year-over-year change of consumer import prices vs. core inflation finds only a modest relationship. There are two reasons for that:
* The United States is mostly a service economy and wages are the biggest input to costs in a service economy.
* The U.S. makes up 25 percent of the world's economy all in one market. As a result, most economists see the U.S. as a price maker, not a price taker.
So, what happens to the U.S. economy will determine what happens to import prices. Import prices will not determine what the price levels are in the U.S.
http://www.cnbc.com/id/20955456/site/14081545/
USD
http://investorshub.advfn.com/boards/read_msg.asp?message_id=23044738
SPX & USD
Strengthening Dollar
Advantages
* Consumer sees lower prices on foreign products/services.
* Lower prices on foreign products/services help keep inflation low.
* U.S. consumers benefit when they travel to foreign countries.
* U.S. investors can purchase foreign stocks/bonds at "lower" prices.
Disadvantages
* U.S. firms find it harder to compete in foreign markets.
* U.S. firms must compete with lower priced foreign goods.
* Foreign tourists find it more expensive to visit U.S.
* More difficult for foreign investors to provide capital to U.S. in times of heavy U.S. borrowing.
Weakening Dollar
Advantages
* U.S. firms find it easier to sell goods in foreign markets.
* U.S. firms find less competitive pressure to keep prices low.
* More foreign tourists can afford to visit the U.S.
* U.S. capital markets become more attractive to foreign investors.
Disadvantages
* Consumers face higher prices on foreign products/services.
* Higher prices on foreign products contribute to higher cost-of-living.
* U.S. consumers find traveling abroad more costly.
* Harder for U.S. firms and investors to expand into foreign markets.
It shows positive divergences, so let's see whether it will bounce up, but LT target to 76.
~~~
Not So Fast On Weak Dollar Concerns
By CNBC.com | 24 Sep 2007 | 10:54 AM ET
There's a lot of concern about whether a weaker dollar could cause higher U.S. inflation, but CNBC’s Steve Liesman says not so fast. Here, he offers a quick overview of different ways to think about the influence of the currency on the inflation process:
* The dollar is an inflation factor, not the inflation factor
* Imports make up just 16 percent of the U.S. GDP. Imports have risen as a percent of total U.S. economic activity. A lot of import growth has come from countries that have fixed exchange rates to the dollar, like China and other Southeast Asian countries, so a weaker dollar has no inflation impact from them.
* Wages are the biggest cost, not commodities or imports
Imports vs. Domestic Prices
A look at the year-over-year change of consumer import prices vs. core inflation finds only a modest relationship. There are two reasons for that:
* The United States is mostly a service economy and wages are the biggest input to costs in a service economy.
* The U.S. makes up 25 percent of the world's economy all in one market. As a result, most economists see the U.S. as a price maker, not a price taker.
So, what happens to the U.S. economy will determine what happens to import prices. Import prices will not determine what the price levels are in the U.S.
http://www.cnbc.com/id/20955456/site/14081545/
USD
http://investorshub.advfn.com/boards/read_msg.asp?message_id=23044738
SPX & USD
Strengthening Dollar
Advantages
* Consumer sees lower prices on foreign products/services.
* Lower prices on foreign products/services help keep inflation low.
* U.S. consumers benefit when they travel to foreign countries.
* U.S. investors can purchase foreign stocks/bonds at "lower" prices.
Disadvantages
* U.S. firms find it harder to compete in foreign markets.
* U.S. firms must compete with lower priced foreign goods.
* Foreign tourists find it more expensive to visit U.S.
* More difficult for foreign investors to provide capital to U.S. in times of heavy U.S. borrowing.
Weakening Dollar
Advantages
* U.S. firms find it easier to sell goods in foreign markets.
* U.S. firms find less competitive pressure to keep prices low.
* More foreign tourists can afford to visit the U.S.
* U.S. capital markets become more attractive to foreign investors.
Disadvantages
* Consumers face higher prices on foreign products/services.
* Higher prices on foreign products contribute to higher cost-of-living.
* U.S. consumers find traveling abroad more costly.
* Harder for U.S. firms and investors to expand into foreign markets.
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