Member Since: 5/18/2012
Posts: 20,576
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The dollar to surpass the euro
Quote:
As of Wednesday, the euro had fallen to a 12-year low of $1.05, down from as much as $1.39 just last year. That's a 24 percent drop in 11 months, to be exact, and there's no reason to expect it to stop anytime soon.
The U.S. economy is doing well enough that it's getting ready to raise rates, and the rest of the world is slowing down enough that it's cutting them. Indeed, the not-so-short list of countries that have eased monetary policy the past few months, some of them multiple times, includes Australia, Canada, Chile, China, Denmark, Egypt, India, Indonesia, Israel, Peru, Poland, Singapore, Sweden, Switzerland, Turkey and, above all, the euro zone. It's finally started buying bonds with newly printed money, a.k.a. "quantitative easing," to try to get its economy out of the low inflation, low growth trap that it's fallen into. And that's not to mention the fact that Japan, which has been stuck in the same kind of one for the better part of two decades, has also been buying bonds this whole time, and recently started buying even more of them.
So it's no surprise that the dollar is shooting up so much. Think about it like this. Would you rather buy a U.S. 10-year bond that pays 2.13 percent or a German 10-year bond that only pays 0.235 percent? That's a pretty easy math question, and investors are answering it by dumping their euros to buy dollars. And that's not going to start changing until the U.S. and Europe's monetary policies stop diverging. That's why Deutsche Bank expects the euro to keep falling to 90 U.S. cents by the end of 2016 and 85 cents by the end of 2017.
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. I can go visit my family this Summer and not have to worry about going broke.
