The dollar trade deficit canard!

Economics is a wonderfully confusing field of study. The debate on the US dollar proves once again the words economics and science should never be used in the same sentence.

There is the prevailing wisdom side of the fence that says the US dollar must depreciate if its trade blance is to improve. Proof positive economists rarely let real world facts get in the way of a good story. Below is a chart of the Balance

The Greatest Currency Ever ... (Go Ahead and Google It!)

It almost seems as if we’re witnessing a veteran prize fighter on the decline, not only failing to win fights but taking brutal beatings along the way.

While the case can certainly be made that the US dollar has many years ahead as world reserve currency, the sentiment is that it does not.

Holding the “official” number one spot – world reserve currency – keeps the US dollar under the spotlight. And the US economy is right there with it.

Will Latvian Pain Hit the Krona?

Latvia is under severe pressure, to say the least. Take a look at the GDP % change year over year:

The chart shows an 18+% decline in GDP yoy! Ouch!

Latvia is taking on much of this pain precisely because it chooses not to devalue its currency, which is pegged to the rising euro. The Prime Minister of Latvia has been firm in his commitment, but yesterday he made clear his commitment is splintering a bit and could have an impact on lenders to Latvia—which primarily make up Swedish banks.

Gulf States Team Up With the RBA to Down the Dollar

A few headlines I saw this morning – have a look:

Swiss franc rises towards parity vs dollar
Russia's rouble firms to strongest vs dollar this year
Rupiah, ringgit at 1-year highs as dollar falters
A$ hits 14-mth peak on RBA hike, swap rates jump
Indian rupee rises past 47/dollar to 4-month high
NZ dollar hits 14-mth highs on Australia rate hike
Singapore dollar at 13-month high, tracks euro