The gap between the US Dollar Outlook and Emerging Market Currencies continues to widen. Here are some of the reasons why:
The biggest reason is the big tax cut for the rich. For all those who might be skeptical, how come we are still talking about the same old goodies that were provided in the last tax package? They will get a tax cut.
Now then, what else does this mean? It means that the middle class is going to be the first to suffer in terms of job losses, future recession scenarios, and wage cuts.
What about the Treasury Department as they try to stabilize the economy and they did not include the tax cut in their deficit reduction plan? I believe they are on a trip to Europe at this point. The tax cut will hit their bottom line hard.
Speaking of the IRS, they have already gotten very used to taking money from the middle class and not returning it. What else can happen other than more unfair treatment of Americans when the rich get a big tax cut? Well, there will be inflation!
Currencies will plummet and the dollar will lose some value. Then it will rise again. Let’s be realistic here, we are already witnessing a negative value, and the next year could be even worse.
Just because the middle class is feeling the pinch, it does not mean they have any more money than ever before. Therefore, they will have to deal with an uncertain future if the dollar continues to plunge.
Market timing is everything. The dollar is now weaker against most other currencies and stronger against the Euro. In fact, they are too strong against the Euro at the moment and it is setting the stage for more of the same.
There are many people who think the President has no real plan to rescue our economy and his biggest weapon is the big tax cut he just approved. I don’t know if the rest of his team is on board with this, but the bottom line is they need to bail out the middle class with some of their own policies.
One other key factor in determining the currency outlook is the long-term economic outlook. Many investors seem to be more worried about the current state of the economy, whereas the currency outlook should be about where it is going.
It is easy to spot long term trends when it comes to using charts and graphs. I prefer them to technical analysis, as I don’t like to read too much information.
The best place to look for trends and currency forecast is right here on this website. Please consider all this.