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The Fall in the Value of the USD Will Not Bring an Economic Slowdown in the US


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The concepts of free enterprise, rugged individualism and entrepreneurship are not incompatible with safety nets and/or the lift up slackers and the disadvantaged among us, that is for government welfare and philanthropic charities” — Paul Ebeling

In Asia Thursday, the USD is near 2-wk + lows Vs its peers tracking the 5yr US T-Note yields lower, after mins of the FOMC’s March policy meeting indicating it is standing pat and will not raise fed funds rate until late in Y 2023.

The .DXY, which measures the Buck against a basket of 6 peer currencies, is lower to 92.371 in the Asian session, after falling to as low as 92.134 Wednesday for the 1st time since 23 March.

The benchmark 10-yr US T-Note yield is at 1.67% Thursday, after dipping below 1.63% Wednesday in the US. It marked a more than 1-yr top of 1.776% late in March.

We expect the USD to move gradually lower as a soft USD is very good for this strengtheninf US economy, manufacturing productivity and jobs creation.

Economist Bruce WD Barren notes that the fall in the value of the US dollar will have these effects.

  • Makes US exports cheaper to foreigners importing US goods.
  • Enhancement of tourism as it is cheaper for non-US citizens to Holiday to the US.
  • US consumers face higher price of imported goods so they buy things Made in America.
  • The lessening of the need for expanded tariffs on Chinese and other low price manufacturing countries.

Plus, a fall in the value of the US dollar likely will contribute to inflationary pressures for a number of reasons.

  1. Import prices will rise causing a degree of imported inflation
  2. The rise in overall demand from cheaper exports
  3. The fall in the value of the dollar may reduce the incentives for firms to cut costs because they get an ‘easy’ improvement in competitiveness. Therefore, a fall in the dollar could harm long-term competitiveness.

President Trump (45) lowering of the dollar policy encouraged US consumers to switch to domestically produced goods, aka America First!

And then there is this Key result: a USD devaluation will improve the current account and reduce the current account deficit.

JPMorgan’s CEO Jamie Dimon says, “This Boom Could Easily Run Into 2023!

Stay tuned…

Wednesday, the benchmark US stock market indexes finished at: DJIA +16.02 at 33446.26, NAS Comp -9.54 to 13688.87, S&P 500 +6.01 at 4079.95, the Russell 2000 underperformed with a 1.6% decliner

Volume: Trade on the NYSE came in at 803-M/shares exchanged

HeffX-LTN’s overall technical outlook of the major US stock market indexes is Very Bullish in here.

  • Russell 2000 +12.6% YTD
  • DJIA +9.3% YTD
  • S&P 500 +8.6% YTD
  • NAS Comp +6.2% YTD

Looking Ahead: Investors will receive the weekly Initial and Continuing Claims report Thursday.

Have a healthy day, Keep the Faith!

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Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.