© Pixabay – Dollar (USD)
The dollar has plunged on the exchange market in recent months. A sacred slap, worthy of a blow. “”My dear finances wolves, hang on! Donald Trump, faithful to his Bulldozer style, dropped the bomb: 145% customs tariffs on China», Underlines James D. Touati (known as the wolf of Zurich), consultant, trainer, trader and founding president of The Nest, interviewed by Capital. A thunderclap that exploded the volatility of the VIX (measurement of volatility of American actions) and plunges the S&P 500 (flagship stock index of the United States, more followed by fund managers than the Dow Jones, better known to the general public) as a rock in the storm.
And as if that was not enough, Donald Trump put pressure on Jerome Powell and the Fed to lower the rates while inflation continues to climb. Result ? Panic on board, the equity markets panic, volatility flies away … before Donald Trump “Do not turn around, suddenly calming the game and bringing the storm falling. But China has not allowed itself to be done: it counterattacks by threatening sanctions against the United States and its allies, blacklisting several American companies, while weaving a diplomatic canvas in Southeast Asia to form a block against Washington“Says Zurich’s wolf.
Read also: Will the euro “will he fly up to $ 1.20 in the coming weeks?”
When the dollar takes revenge on other currencies, the increase is spectacular!
Meanwhile, the course of the Once d’Or flies, spraying its records at 3,500 dollars. “”A real rush to safety (yellow metal is considered to be a reference refuge value). But do not be mistaken: gold is the ultimate reserve, not a transaction currency. The dollar remains the undisputed king of the currencies, the pillar of the world monetary system, and it will remain soAssures the consultant. Since 1969, the dollar has only experienced three notable drops: from January 1969 to December 1979 (-33%), then from May 1985 to August 1992 (-52%), and finally from May 2001 to June 2008 (-41%). And “Then the increases were literally spectacular !! ( +101% from December 1979 to May 1985, +55% from August 1992 to May 2001 and +61% between June 2008 and the summit in recent years, editor’s note)», Underlines James D. Touati.
© Doxy TradingView: Le-Loup-de-Zurich – Dollar: evolution of the currency course
Even with the emergence of cryptos since 2009, none has managed to shake the hegemony of the dollar. Trump “reacted as soon as the greenback (the dollar, editor’s note) has weakened and that the American bond yields (the rate of return of the bonds) have climbed, showing that the dollar keeps its major assets», Makes the wolf of Zurich, for whom the dollar remains a safe purchase: when gold falls, the greenback takes up colors. Today, this drop in the dollar “is a gold opportunity for foreign investors, who take the opportunity to seize green tickets and invest massively in the American markets, which explains the recent spectacular rise in American equity indices”, explains the expert.
Donald Trump and the United States cannot afford prolonged drop in the dollar
But let’s add a little depth to this table: prolonged drop in the dollar would have major consequences, both in the United States and worldwide. First, a lower dollar would strengthen the competitiveness of American exports, making the made in USA more attractive in international markets, which could “Stimulate American economic growth and reduce abyssal trade deficit. Mirroring, imports would become more expensive, which could encourage companies to relocate their production to American soil, an objective displayed by the Trump administration», Analysis the wolf of Zurich.
However, this depreciation would not be without risk: “It would penalize foreign investors holding dollar assets, reducing their real purchasing power and which can cause capital outings. In addition, the increase in prices of imports could fuel inflation in the United States, complicating the Fed task in the face of price control“Warns James D. Touati. On the international level, a lower dollar temporarily weakens the value of the exchange reserves held in dollars, but could also push certain countries to accelerate their diversification towards other currencies than the dollar, in particular the euro, which could thus strengthen its role of reserve of international value.
Read also: However, dollar, obligations … What were the refuge values in the bustle of the markets?
The dollar remains the pillar of the system, the King of the exchange market
In summary, do not be impressed by this great merry -go -round of volatility and political blows. The dollar, even shaken, “There remains the pillar of the system, a colossus with solid clay feet like a rock. The current storm is only an episode in a saga where the greenback keeps its throne, despite the tremors and provocations. So, my friends, stay Zen, keep your positions, and remember: in this game, the dollar is always the Alpha wolf», Underlines James D. Toutai.
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