Mr. Cohn has given every indication that he is not in favor of a
strong dollar, which is consistent with the views of President Trump,
who has several times talked about achieving a weaker dollar. So if this
is true then Mr. Cohn will tend to favor lower interest rates and will
in turn support a strong stock market.
This direction is exactly the opposite of what international markets seem to be wanting from the United States. Only one year ago the dollar cost of a Euro was around $1.07, and most experts believed that the value of the dollar might be heading to par with the Euro.
One year later faith appears to be waning over the commitment of the US government to a strong dollar and the economic policies that would be needed to achieve and sustain a strong dollar.
Now with the uncertainty being felt around the globe of US economic policies and the uncertainties surrounding the future of the Federal Reserve, investors seem to be bailing out on the dollar.
The interesting thing to note here is that only one year ago, most global investors were supporting a future where the value of the dollar might be around parity with the Euro, and now it looks much more likely that the value of the dollar might be in the $1.20 to $1.25 range for the Euro.
This is a massive about face in the attitudes that people have with respect to the value of the dollar and future of the United States.
Furthermore the value of the US dollar has even declined since late October 2016 against the British Pound. In late October 2016, one Pound cost around US$1.22 to. Recently, the price of a pound has climbed to US $1.28 to $1.32 range, again reflecting the weakness of the US dollar.
Let us also understand that this weakness has taken place as the British Government, under the leadership of Prime Minister Theresa May, have floundered (was the nicest word we could find) in the worst way possible in its efforts to leave the European Union otherwise known as Brexit. Surprisingly the British pound still rose against the dollar.
Paul Volcker, who is the former Chair of the Board of Governors of the Federal Reserve System, argued that the price of a country’s currency in foreign exchange markets was the most important price for an economy. We agree with him on this point.
You see, when you have a weaker currency you will provide a little boost to the economy in the short-run, but over the long term, a weak currency implies a weak economy. So, to us, the falling value of the US dollar in foreign exchange markets does not really bode well for the US economy
This direction is exactly the opposite of what international markets seem to be wanting from the United States. Only one year ago the dollar cost of a Euro was around $1.07, and most experts believed that the value of the dollar might be heading to par with the Euro.
One year later faith appears to be waning over the commitment of the US government to a strong dollar and the economic policies that would be needed to achieve and sustain a strong dollar.
Now with the uncertainty being felt around the globe of US economic policies and the uncertainties surrounding the future of the Federal Reserve, investors seem to be bailing out on the dollar.
The interesting thing to note here is that only one year ago, most global investors were supporting a future where the value of the dollar might be around parity with the Euro, and now it looks much more likely that the value of the dollar might be in the $1.20 to $1.25 range for the Euro.
This is a massive about face in the attitudes that people have with respect to the value of the dollar and future of the United States.
Furthermore the value of the US dollar has even declined since late October 2016 against the British Pound. In late October 2016, one Pound cost around US$1.22 to. Recently, the price of a pound has climbed to US $1.28 to $1.32 range, again reflecting the weakness of the US dollar.
Let us also understand that this weakness has taken place as the British Government, under the leadership of Prime Minister Theresa May, have floundered (was the nicest word we could find) in the worst way possible in its efforts to leave the European Union otherwise known as Brexit. Surprisingly the British pound still rose against the dollar.
Paul Volcker, who is the former Chair of the Board of Governors of the Federal Reserve System, argued that the price of a country’s currency in foreign exchange markets was the most important price for an economy. We agree with him on this point.
You see, when you have a weaker currency you will provide a little boost to the economy in the short-run, but over the long term, a weak currency implies a weak economy. So, to us, the falling value of the US dollar in foreign exchange markets does not really bode well for the US economy
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