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3rd September 2008
I believe markets are driven 50pct by market forces and 50 pct by the policy of politicians, mainly the US.
1- Market forces: The US economy is in shambles, we know that for a fact. But we also know that the European economy is even worse off at this moment.
The Dollar is low, the Euro is high. Both don't deserve to be high but nobody should favor the Euro on the Dollar. Based on this, I believe market forces would push the dollar to 1.30-1.32.
2- Political impact: G.W. Bush is working on his legacy, he cannot afford to hand power to the next president with a dollar at 1.50. With all his interference, he will not be able to reach the 1.15/1.20 level. So for him, the best scenario to have an "acceptable" legacy is for the dollar to be 1.30 and to push for Mc Cain to win the elections.
Time will tell if I am right. |