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2017 prediction for the usd market.

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    2017 prediction for the usd market.

    China will set up currency Swap by passing through USD. Due to Trump policy; Trump has woken up the sleeping Tiger!

    #2
    The market will probably go up and down and up and down until im dead...then I can no longer predict what its going to do.

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      #3
      My predictions:

      The savings rate will go up a tiny bit, so I'll be watching long-term CD rates.

      I think regular investments will do okay--not great, but okay. We've been due for a market correction for awhile now, so I'm hoping for a good buying opportunity next year. My investments are generally all super-conservative, so will ride out whatever comes.

      Comment


        #4
        This is a super, super interesting question.

        I have heard and read speculation along two lines.

        First, - this is super speculative, but - the new administration may favor negative interest rates. This is going to slap savers in the face but it will have the impact of increasing the amount of money in circulation and may help spur economic growth. This will likely impact the value of the dollar.

        Second, - there has been additional speculation that the new administration may return to the gold standard. This is based on the fact that at least two academic proponents of the gold standard are advisors to the President Elect. A possible return to the gold standard may be in the form of gold backed bonds. A likely impact of these bonds will be to stabilize exchange rates.

        If we are talking about comparative currency strength, the pound may have a period of softness moving forward as the UK economy retools after Brexit. The Euro will be under severe pressure if Italian and French secessionists are able to gain power.

        Its off topic, I know, but I think digital currencies like bitcoin will show a continued upward trend in the next 12 months. Why? There appears to be increased institutional acceptance for these currencies (e.g. bitcoin may be traded on the CME) and hedge funds are increasingly getting involved.
        james.c.hendrickson@gmail.com
        202.468.6043

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          #5
          Originally posted by james.hendrickson View Post
          This is a super, super interesting question.

          I have heard and read speculation along two lines.

          First, - this is super speculative, but - the new administration may favor negative interest rates. This is going to slap savers in the face but it will have the impact of increasing the amount of money in circulation and may help spur economic growth. This will likely impact the value of the dollar.
          Interesting...

          But with 62% of Americans having less than $1000 in their savings and a savings rate of 5.7%, I don't think a negative interest rate would put much money into circulation. Also due to our low interest rate from CDs and savings accounts the past 7 years...I also don't believe anyone is putting their money into savings anyway. This is why some financial experts are calling the stock market a low interest rate induced bubble. Wouldn't a negative interest rate today cause a run on the bank crisis especially considering how our banks are structured?(10% reserve, the rest are just made up money).

          So far our inflation numbers are okay...my money is on further interest rate increases than decrease...unless we are implementing negative interest rates just because...

          I know they have tried negative interest rates with little success in Europe and Japan...but I believe their citizens have a MUCH higher savings rate than citizens of the U.S(ours is more of a debt driven economy).
          Last edited by Singuy; 12-02-2016, 11:32 AM.

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            #6
            Right now USD is strong against all majors; a higher rate will make it even stronger. In the long term, currency strength will still reflect the actual economy; but rates definitely have a quick effect.

            E.g. fed raises rates --> economy is doing good --> USD strengthens. Ok, to view it another way: fed raises rates --> US banks gives higher interests --> USD is more desirable (because BOJ isn't giving you any interest).

            I think every investor can benefit from FOREX trading. It gives you a global view on things; plus, it also opens up another option for an investor.

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              #7
              A more concrete example why interst rates affect USD strength.

              US banks gives 1% interest; German banks gives 0% and asks for 0.1% to borrow.

              I'm a German who's got $$ in a German bank. Why not convert my EUR to USD and put it in a us bank? I'd make 1%/0% --> infinitely more return : ) Well, why don't I borrow a bunch of EUR from my German bank at 0.1% and put that in US bank and make 0.9% --> infinite borrow = infinite return. No smilely here because it is actually possible!

              I grossed over some kind-of-important stuff, but for the interested, you may want to look up currency carry trade.

              Comment


                #8
                Originally posted by sv2007 View Post
                Right now USD is strong against all majors; a higher rate will make it even stronger. In the long term, currency strength will still reflect the actual economy; but rates definitely have a quick effect.

                E.g. fed raises rates --> economy is doing good --> USD strengthens. Ok, to view it another way: fed raises rates --> US banks gives higher interests --> USD is more desirable (because BOJ isn't giving you any interest).

                I think every investor can benefit from FOREX trading. It gives you a global view on things; plus, it also opens up another option for an investor.
                You keep saying this, but I looked at it and unless you know what you are doing it is simply gambling. Just like equity / option / derivative trading. No way to broadly diversify like an index fund. Unless I'm missing something.

                Comment


                  #9
                  Originally posted by sv2007 View Post
                  A more concrete example why interst rates affect USD strength.

                  US banks gives 1% interest; German banks gives 0% and asks for 0.1% to borrow.

                  I'm a German who's got $$ in a German bank. Why not convert my EUR to USD and put it in a us bank? I'd make 1%/0% --> infinitely more return : ) Well, why don't I borrow a bunch of EUR from my German bank at 0.1% and put that in US bank and make 0.9% --> infinite borrow = infinite return. No smilely here because it is actually possible!

                  I grossed over some kind-of-important stuff, but for the interested, you may want to look up currency carry trade.
                  And then BREXIT happens and you have hundreds of millions of Euro stuck in Europe that would cost you 40% to repatriate. Happens to big US companies all the time.

                  Comment


                    #10
                    Originally posted by james.hendrickson View Post
                    I have heard and read speculation along two lines.

                    First, - this is super speculative, but - the new administration may favor negative interest rates. This is going to slap savers in the face but it will have the impact of increasing the amount of money in circulation and may help spur economic growth. This will likely impact the value of the dollar.

                    Second, - there has been additional speculation that the new administration may return to the gold standard. This is based on the fact that at least two academic proponents of the gold standard are advisors to the President Elect. A possible return to the gold standard may be in the form of gold backed bonds. A likely impact of these bonds will be to stabilize exchange rates.
                    Speculation is the appropriate word to use here, as there is 0% chance of either of these things happening.

                    Really folks - ignore the headlines (especially the speculative headlines) and invest according to your plan.
                    seek knowledge, not answers
                    personal finance

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                      #11
                      I don't try to make predictions for purely speculative purposes.
                      Yes, you could say the USD is now somewhat "strong" but in my lifetime it has been a heck of a lot stronger. I was an exchange student in the mid-80's and thought the country I lived in was "super cheap" . . . but at today's exchange rate the same country seems "expensive."

                      Although I'm not interested in playing the currency markets, DH & I do have a "buy" number in mind when we will buy some currency of DH's native country. We've had the same number for awhile now, but haven't hit it yet. We are watching the exchange rates more closely now as it's getting closer.

                      In a way this could be considered "timing the market" but only in order to buy some currency that we would be buying eventually anyway (DH travels there 2-3 times a year and I travel there periodically to visit his family). I'd compare it to stocking up on a pantry staple when it's on sale or carefully considering the best time of year to make a major purchase (car, appliance, etc) that you need anyway. Or when we "timed" the sale of our house followed by a home purchase several years later.

                      I do think that for anyone who knows they will be traveling overseas in the next few years, it wouldn't hurt to study the exchange rates and make an educated guess about an ideal time to buy the currency of the country you'll be visiting. Of course, if you are very close to taking an overseas trip, it might make the most sense to wait until you arrive at your destination as the best "today" rates are often not found here in the US but at your travel destination.

                      Comment


                        #12
                        Originally posted by tomhole View Post
                        And then BREXIT happens and you have hundreds of millions of Euro stuck in Europe that would cost you 40% to repatriate. Happens to big US companies all the time.
                        http://www.savingadvice.com/forums/g...tml#post436078

                        I looked up one of my old posts that seemed relevant.

                        FOREX is a tool in the set of tools available (and this tool is very powerful). Knowing what's available gives an investor more flexibility.

                        I'm not here to teach anybody how to invest in FOREX. If I'm able to in just a few posts, then I should go into teaching. I'm here to point people in a direction that some may not know about; it is the initial spark for exploration.

                        As for gambling; well, lots of people who don't research also thinks buying stocks is a big gamble.

                        As for large corps and FOREX, many use it to hedge against currency fluctuations, i.e.they use FOREX to guard against exactly what you mentioned.

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                          #13
                          Originally posted by sv2007 View Post
                          http://www.savingadvice.com/forums/g...tml#post436078

                          I looked up one of my old posts that seemed relevant.

                          FOREX is a tool in the set of tools available (and this tool is very powerful). Knowing what's available gives an investor more flexibility.

                          I'm not here to teach anybody how to invest in FOREX. If I'm able to in just a few posts, then I should go into teaching. I'm here to point people in a direction that some may not know about; it is the initial spark for exploration.

                          As for gambling; well, lots of people who don't research also thinks buying stocks is a big gamble.

                          As for large corps and FOREX, many use it to hedge against currency fluctuations, i.e.they use FOREX to guard against exactly what you mentioned.
                          Yes, we do hedge. We win a few, lose a few, but in the end, it all seems to come out as a wash. Right now, we have the worst situation with the strong dollar. Not only do our products cost "more" to our overseas customers, the currency that we get paid in for it is worth less. It's a double whammy. Hedging helps the transactional aspects but does nothing for translational Fx. My group has "lost" $30M in profit due to Fx. In reality, we just leave the profits overseas until we get a more favorable Fx. But this is all corporate mumbo jumbo.

                          So, my question is, how do you determine when and where a currency is going to move? Seems it would involve the same level of research on when/where a stock might move, just different driving factors. Is FOREX more predictable than stocks?

                          Comment


                            #14
                            Originally posted by tomhole View Post
                            So, my question is, how do you determine when and where a currency is going to move? Seems it would involve the same level of research on when/where a stock might move, just different driving factors. Is FOREX more predictable than stocks?
                            Very similar to how everything is determined. It is similar to stocks: there are technical traders, fundamental traders, and everything in between.

                            I'm a mostly fundamental trader.

                            I don't think FOREX is any more of less predictable than stocks. If you ask me if company XYZ is going to be traded higher or lower tomorrow than today, I'd have no answer. Just like if you ask me if USD will gain or lose against MXN tomorrow. But, I do know that if something happens then there's probably going to be this or that movement. E.g. if company xyz released bad earnings after close, I'd say tomorrow it'll likely lower. If fed raises rates and Trump starts building his wall, I'd say MXN will probably lower against USD.

                            But a pure technical trader will have different views, probably something like: as long as the model's predictability is the same, both FOREX and stocks are equal in predictability.

                            Comment


                              #15
                              As for how I determine what to buy. It's like stocks; I play FOREX for long term, just like stocks (except my FOREX long term is months while stock is years). I look at a country and gather trade and political news (for example, when Crimea was annaxed, you just know it is Russia and things are going to get bad; and Russia has no power). For example, even now I believe Russia is a paper tiger, but Trump may believe differently (so I keep watch). but I normally only stay with the majors; so a lot of it is judging the trade situation (for example, this holiday season, I'm hoping for records or near records; any hint of recession will not be what I'm thinking ATM).

                              Again, my strategy may not suit another person, just like stocks. There are many different types of investors.

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