Tuesday, November 17, 2009

Thought of the Week

Many commentators are talking with doomsday language of an imminent Dollar plunge. While a further decline in the Dollar is certainly possible, a "plunge" doesn't seem in the cards. First, the U.S. trade deficit has narrowed sharply over the last year. Second, the U.S. economy grew faster in 3Q than the Euro-zone or the U.K. Third, as can be seen in this week's chart, investors have more faith in U.S. debt than they do in our major trading partners. So while an orderly decline in the Dollar is possible, a collapse doesn't seem too likely.

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