Hi, as an American with USA dollar loans to serve and earning in pounds, just wondering if anyone has a good idea what the dollar is likely to do next and when. I am kicking myself that i didn't convert some sterling in December when the rate was 1.93, but everyone kept saying it was gonna hit $2.

I will need to send some soon but not sure if i should send a lot betting it will go down or wait a bit?

I'd really appreciate any info!

I think it'll be going down for some time.

I was looking at a rather nice fund yesterday, and despite something like 30% dollar based assets, their dollar exposure is only 1%. Guess why that is...
Same thing for warren buffer, who said many months back he'd be staying out of dollars for quite some time.

I would have to say the opposite Bee Bear. The dollar is going to strengthen against the pound over the next year, as the Uk housing market and economy weaken and the US Federal Reserve raise US interest rates to 4% by the end of 2005. If I was you I would wait short-term for an up-tick in the pound/dollar rate (ie if some really bad news about the US economy comes out or some good news about the UK economy comes out) and take advantage of that brief weakening of the dollar against the pound.

To summarise, I think the dollar is going to strength against the pound over the coming year, so you may want to convert sooner rather than later.

Given the epic US trade deficit and foreign reserve banks reducing their dollar exposure. The dollar will go down, against the euro for sure.
Against sterling not sure.
Play safe, buy euros.

http://www.bloomberg.com/apps/news?pid=100...Zrs7ys&refer=us

I would advise prudence. Transfer about 5% of the total amount you want in USD every month for the next 20 months. You will get a decent average rate of conversion. You will of course not get the best rate, but will also avoid converting all your money at the worst rate

I will have to say that the messages coming out of the FED - POLICY are what matters. Not mere mortal ant-like creatures views - i.e. US!.
A stronger dollar is now in the interests of the US. As otherwise domestic consumption and jobs will crack under higher commodity and oil prices to come.

Filter out some of the stock market investors advice - they are rarely correct on macro issues, this BTW includes Buffett and Gates who made the same call in 1984 on the twin deficits only to be proved wrong. If you followed Gates into Telewest shares you would have found it was fakery.

Listen more intently to the bond market investors. A lot of them are now certain that after all these years of decline the dollar has bottomed out, bonds are to drop in price, and they will start to follow FED interest rates up, credit made tighter.

I reckon the US trade deficit will reduce, over the year, while the UK will follow Australia and see its trade deficit rise. If there was a time to change to dollar investments I would say its around these levels of 1.92. Forget about perfect timing. If the all the worst crap happens the dollar will only drop to 2.30 and then come back as interest rates rise.
We now have US policy to support the dollar
- Capital repatriation by corporations - who can get immense tax relief by moving billions of dollars back into the US.
- A steady rise in US interest rates and clear messages from Greenspan.

The future of the USD is out of the hands of Greenspan. It is in the hands of players in SE Asia who, if they decide to opt out of USDs for Euros, will see the USD crash. This could trigger a 1970s style global financial crisis.

Apparently Gates and Buffett have been getting out of the USD of late.

i talked to a friend in texas yesterday. they are 100% sure and ready for an IR hike next time. everybody is under NO ILLUSION that one is coming. they are prepped up though, so its not going to be a big shock. but they are fully accepting of the next move being up.

though general work and economy was as avaerage as ever. no job cencerns etc. sounds stable enough from what i was told.

And? If the world cared about America's interests, nothing bad would ever happen there.

I read an article recently which claimed that American international borrowing is now greater than _the entire private savings of the rest of the world_. Every penny that every non-American puts in a savings account could be shipped across the Atlantic and they'd still need foreign governments to buy bonds to keep the US economy going.

The only way for the dollar to go up is for the Fed to raise interest rates: but that would crash the US housing bubble, so that's not possible. But as the exchange rate worsens, the price of oil and other commodities go up, which will, sooner or later, crash the US economy.

I don't see any way out whatsoever. But with both the ECB and BoE looking set to raise interest rates, and vast US deficits, it seems pretty clear that the dollar is only going to get worse against the Euro, and quite possibly against the pound. My suspicion is that the Chinese government are just waiting for the right time to float their currency and dump their bonds, at which point the US economy is screwed.



Why? Anyone who's been buying US bonds in the last couple of years is a certified loon. It's damn hard to make money on bonds when the currency they're denominated in drops 25% in two years... they'd have been much better off just sticking the money in a Euro or sterling savings account.