http://www.forexconspiracyreport.com/why-is-the-us-dollar-so-strong/
Why Is the US Dollar So Strong?
In the wake of the Great Recession the US Federal Reserve undertook to stimulate the US economy and drove down the value of the greenback. That situation has reversed. Why is the US dollar so strong today? Bloomberg reports that U.S. growth is part of the story.
The dollar advanced to highest level in more than six weeks as economic data in the U.S. continue to signal expansion, setting the world’s biggest economy apart from slowing growth elsewhere around the globe.
The U.S. currency strengthened versus most of its major peers as stronger-than-forecast construction in new homes added to evidence the economy is picking up steam. Citigroup Inc.’s U.S. Economic Surprise Index, which measures whether data beat or miss forecasts, rose to the highest since January 2015 following reports showing stronger payroll and retail sales. The International Monetary Fund scrapped its forecast for a pickup in global growth this year, while reiterating its call for a 2.2 percent U.S. growth.
A strong economy typically strengthens a nation’s currency but there is more to why the US dollar is so strong. It is the Federal Reserve and the prospect of higher interest rates.
Higher Interest Rates to Stave off Inflation
The US central bank, the Federal Reserve, is tasked with the job to avoiding or fighting inflation. It turns out that it is a lot easier to avoid inflation than deal with it once it gets going. The Fed is raising interest rates in an attempt to avoid inflation but not so fast as to choke off the economic recovery. The Wall Street Journal says that Fed officials believe they can raise rates this year due to healthier than expected economic data.
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6. The dollar advanced to highest level in
more than six weeks as economic data in
the U.S. continue to signal expansion,
setting the world’s biggest economy
apart from slowing growth elsewhere
around the globe.
7. The U.S. currency strengthened versus
most of its major peers as stronger-than-
forecast construction in new homes
added to evidence the economy is picking
up steam.
8. Citigroup Inc.’s U.S. Economic Surprise
Index, which measures whether data beat
or miss forecasts, rose to the highest
since January 2015 following reports
showing stronger payroll and retail
sales.
9. The International Monetary Fund
scrapped its forecast for a pickup in
global growth this year, while reiterating
its call for a 2.2 percent U.S. growth.
10. A strong economy typically
strengthens a nation’s currency but
there is more to why the US dollar is
so strong.
11. It is the Federal Reserve and the
prospect of higher interest rates.
13. The US central bank, the Federal
Reserve, is tasked with the job to
avoiding or fighting inflation.
14. It turns out that it is a lot easier to
avoid inflation than deal with it once
it gets going.
15. The Fed is raising interest rates in an
attempt to avoid inflation but not so
fast as to choke off the economic
recovery.
16. The Wall Street Journal says that Fed
officials believe they can raise rates
this year due to healthier than
expected economic data.
17. Federal Reserve officials are looking
more confidently toward an interest-rate
increase before year-end, possibly as
early as September, now that financial
markets have stabilized after Britain’s
vote to leave the European Union and
the economy shows signs of picking up.
18. Officials are almost certain to leave rates
unchanged when they meet July 26-27,
according to their public comments and
interviews with officials.
19. But the message in their post meeting
policy statement could be that the
economy is on a more solid footing than
appeared to be the case when they last
gathered in June, setting the stage for
raising rates if the data hold up in the
months ahead.
20. The US economy is the only really
healthy large nation economy in the
world.
21. China has a more rapid growth rate
but it is falling and money is flowing
out of China and the Yuan is still
falling.
22. China bet heavily on a robust economic
recovery from the 2008 recession and
took on a mountain of debt.