A Historic Day for the Dollar 7/31/2020
Dollar strength at the monthly view.
Rest in piece, dollar strength. The dollar put up a fight. However, it failed to close the month above 93.60. As a result, today was the first month that the dollar closed below its 11-year-old channel. That same channel is what stabilized the dollar since the aftermath of the 2008 recession.
What does this mean? Inflation is coming for us.
From a trading view, equities, commodities, and cryptocurrencies will rise due to the inflation. In addition, traders would be less willing to sell their assets. After all, if equities, commodities, and crypto are rising, when why you would sell for a currency that is losing value?
In the longer term, any profits made with those assets could be eaten away by inflation. If silver goes up by another 10%, you sell it for a 10% profit. However, if the dollar tanks about 8%, then the inflation devalued your profits.
Also from a trading view, Japan and Germany would face some serious red days since that means their currency strengthens. Japan and Germany are mainly export economies. A stronger currency for them would make them less competitive with their exports. Currently, the Nikkei and DAX are in a state of panic from a weak dollar.
From an economic view, this will destabilize the financial sector and slow down economic recovery.
Think about it.
People won't sell because their assets would be inflated. They would sell if they need immediate cash. If they need cash, they can get a loan at extremely low interest rates. Banks need that interest revenue to survive the next recession. Furthermore, due to inflation, the value of that loan would be eaten away. Even if a bank loans out, they would lose profits due to that inflation.
Why is this important? How many developed economies don't have a financial sector (banks)?
The dollar would need to pull a miracle by the end of August to have any hopes of a faster recovery from this recession. We are talking north of at least 93.80.
Rest in piece, dollar strength. The dollar put up a fight. However, it failed to close the month above 93.60. As a result, today was the first month that the dollar closed below its 11-year-old channel. That same channel is what stabilized the dollar since the aftermath of the 2008 recession.
What does this mean? Inflation is coming for us.
From a trading view, equities, commodities, and cryptocurrencies will rise due to the inflation. In addition, traders would be less willing to sell their assets. After all, if equities, commodities, and crypto are rising, when why you would sell for a currency that is losing value?
In the longer term, any profits made with those assets could be eaten away by inflation. If silver goes up by another 10%, you sell it for a 10% profit. However, if the dollar tanks about 8%, then the inflation devalued your profits.
Also from a trading view, Japan and Germany would face some serious red days since that means their currency strengthens. Japan and Germany are mainly export economies. A stronger currency for them would make them less competitive with their exports. Currently, the Nikkei and DAX are in a state of panic from a weak dollar.
From an economic view, this will destabilize the financial sector and slow down economic recovery.
Think about it.
People won't sell because their assets would be inflated. They would sell if they need immediate cash. If they need cash, they can get a loan at extremely low interest rates. Banks need that interest revenue to survive the next recession. Furthermore, due to inflation, the value of that loan would be eaten away. Even if a bank loans out, they would lose profits due to that inflation.
Why is this important? How many developed economies don't have a financial sector (banks)?
The dollar would need to pull a miracle by the end of August to have any hopes of a faster recovery from this recession. We are talking north of at least 93.80.
คำจำกัดสิทธิ์ความรับผิดชอบ
ข้อมูลและบทความไม่ได้มีวัตถุประสงค์เพื่อก่อให้เกิดกิจกรรมทางการเงิน, การลงทุน, การซื้อขาย, ข้อเสนอแนะ หรือคำแนะนำประเภทอื่น ๆ ที่ให้หรือรับรองโดย TradingView อ่านเพิ่มเติมที่ ข้อกำหนดการใช้งาน