# Impact of a US Dollar crash



## Kimosabi (16 April 2007)

I read the following article yesterday on the US dollar is heading towards it's support levels that haven't been breached for almost 30 years.



> *Perched Precariously on a Precipice*
> 
> The dollar is no longer responding to traditional stimulants. This week, despite the apparently "hawkish" tone in the recently released Fed minutes, and trade deficit figures that were slightly less horrific than expected, the dollar nevertheless declined against just about every currency on the planet. As a result, it now teeters dangerously close to the edge of a very large precipice. Looming large is the 80 level of the U.S. Dollar Index which has stood as long term support for almost thirty years. This week, the Index broke below 82, and is sinking fast. When this critical level is breached, look out below. Without any support beneath it, the dollar could literally fall off a cliff.
> 
> ...




Now the question is, if the US dollar does collapse, what will be the impact on Australia and World Markets etc?


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## CanOz (16 April 2007)

Certainly looking pretty sick against the CDN$. A weak US dollar should drive their exports, which they really need.


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## wavepicker (16 April 2007)

Kimosabi said:


> I read the following article yesterday on the US dollar is heading towards it's support levels that haven't been breached for almost 30 years.
> 
> Now the question is, if the US dollar does collapse, what will be the impact on Australia and World Markets etc?




Lots of pessimism on the US Dollar ATM. Way too much bearishness for a crash to occur in the short to medium term. In terms of a secular trend however anything is possible.

This is the sort of sentiment seen toward market bottoms, IMO the commodities bull is in it’s last stages of the campaign and should terminate this year. Sure will continue to make new highs(even in Gold and Silver) , but if one studies the US Dollar Index closely (which is a measure of the US Dollar performance against a basket of currencies), it is clear that this last move down is a creeping/struggling trend. This market is churning and should start a multi year countertrend. Once again the majority will be projecting the current trend into the future because that is what has happened in the future, once again 95% of then will get burnt like most traders did in the dot.com boom.

Cheers


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## Uncle Festivus (16 April 2007)

Wavepicker, maybe some trends are terminal?


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## bvbfan (17 April 2007)

Watch for a rally once the Yuan is revalued as money floods out of China back into USD for a short term spike (rally) that may be last chance for everyone else to offload their USD holdings.


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## drillinto (3 June 2007)

Jim Grant's opinion on the US Dollar

http://www.ft.com/cms/s/f2f3a8a8-0f12-11dc-b444-000b5df10621.html


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## theasxgorilla (3 June 2007)

Kimosabi said:


> Now the question is, if the US dollar does collapse, what will be the impact on Australia and World Markets etc?




This has been a coming and going speculation for years now.  And still no collapse.  Depreciation against a many other currencies including the AUD, EUR and CAN, but no collapse.

I can say what I won't be doing.  Holding any medium to longer term positions in the US market without a USD hedge.  If you did this in the S&P500 for the last 3 years (investing from the EUR zone) and brought your 'profits' back into the EUR zone you'd have ended up with the big Orbison (zero) due to USD depreciation.


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## nizar (3 June 2007)

theasxgorilla said:


> This has been a coming and going speculation for years now.  And still no collapse.  Depreciation against a many other currencies including the AUD, EUR and CAN, but no collapse.
> 
> I can say what I won't be doing.  Holding any medium to longer term positions in the US market without a USD hedge.  If you did this in the S&P500 for the last 3 years (investing from the EUR zone) and brought your 'profits' back into the EUR zone you'd have ended up with the big Orbison (zero) due to USD depreciation.




Hi ASXG.

Definately hedging currency risk will be something i will be looking into as i start developing a system to trade long/short US Stocks.

Coming from the Euro zone, i certainly hope you been trading the DAX!


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## explod (8 June 2008)

At a significant point in world financials a fresh look at the world's reserve currency is appropriate.

At the head of this Thread, introduced by Kimosabi back on the 16th April 07, the lead article has indeed proven to be accurate in it's observations and forcasts.   Since that date the US$ index has fallen more than 12%, it is in the process of completing a double head and shoulders, and poised this week to test it's all time low of 70.69 recorded 17th March 08

From my view, a french curve placed on the chart since June 06 (from INO which wont post for me) would indicate that the Index fall is about to accelerate.  The fall on Wall Street Firday night, and the tremors going through the financial world as we speak may confirm this outlook.


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## BentRod (8 June 2008)

Does anyone have a current long term chart of USDX?


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## Shane Baker (8 June 2008)

BentRod said:


> Does anyone have a current long term chart of USDX?




Here tis


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## BentRod (8 June 2008)

Thanks very much Shane.


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## Kauri (28 August 2008)

Just for interests sake..
*All conjecture*.. until it proves up one way or tother.. but helps explain one of the factors that may be affecting the FX markets..
There has been a lot of talk over the past 24 hours about a number of technical analysts calling for a turn lower in the US dollar index. Analysts who follow Demark say that the DXY completed a 13 count two days ago and has started a "9-count" higher. A break of the "9-count" higher would occur if the DXY made a daily close below the close four days previous. The close four trading days ago was 76.80 so a daily close later today below that level would negate the "9- count" and confirm that the 13-count high at 77.62 is a major top and a significant turn lower is underway.

Cheers
..........Kauri


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## kosai (23 September 2008)

I'm surprised this thread wasn't revisited with all of the recent events. It's very clear now that there are major cracks in the financial system of the united states and it makes this dollar crash scenario far more likely to occur.

When you even consider the fact that Alt-A and Option ARM loans are yet to even hit the banks, it's very clear that this is one they can't recover from.


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## gfresh (23 September 2008)

yes.. 

Latest USD chart for visual representation. They went on about the oil price rising the largest ever in one day, but they gave scant mention to the $USD falling the furthest I can see in the last 3 years against other currencies.


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