The U.S. Dollar - Where To From Here
The U.S. dollar represents a gauge measuring the markets’ move toward high return/higher risk ($US falling) or risk aversion ($US rising). Longer term, we expect the U.S. dollar to continue its downward trend as the U.S. government issues massive amounts of new debt. However, in the short term, the dollar was rising as risk aversion grew. A major spike in the $US could cause a lot of commodity selling as speculators are leveraged to the long commodities/short $US trades. The dollar index rallied as the risk aversion trade was on and a great deal of uncertainty shrouded the European debt crises of Greece, Ireland, Portugal and others, but is again weakening relative to other unpegged currencies.
The U.S. Dollar Index is a weighted gauge against the Euro, Yen, Pound, and three other currencies.
