Tuesday, December 18, 2007

There's Hope For the US Dollar: Comeback Ahead?

Using mid-December exchange-rate data from FT.com, the chart above shows the one-year forward discount or premium for the US dollar vs. the Euro and British Pound in 2005, 2006, and 2007.

Note that two years ago, the USD was trading at a one-year forward discount vs. both the Euro (-2.0%) and the BP (-0.20%). In recent trading, the USD is now trading at a one-year forward premium vs. both the Euro (+0.20%) and the BP (+1.20%).

Bottom Line: There's hope for the USD! Its value has stabilized, and it has actually appreciated by more than 2% vs. the Euro in the last week, and by 1.5% vs. the British Pound. And since late November, the USD has been trading at a one-year forward premium vs. the Euro for the first time in at least three years, and I don't think that has received any media attention.

2 Comments:

At 12/18/2007 11:02 AM, Anonymous Anonymous said...

It's about time that the dollar stabilizes! I don't think I could take another 35%+ drop in value like we've seen since 2002.

 
At 12/18/2007 11:03 AM, Anonymous holymoly said...

I thought you liked the cheap dollar so Canadians could come to the U.S. and treat us like Wal-Mart.

Are you flip-flopping?

 

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