What the stronger dollar means
“The dollar’s big bounce over the past week” against other major currencies, says David Bogoslaw in BusinessWeek.com, could either be “a sign of growing confidence in U.S. growth prospects,” or just expectations that things are getting worse abroad. The U.S. Federal Reserve and the European Central Bank both left interest rates unchanged last week, but investors are betting that the Fed’s next move will be a rate hike and the more nervous ECB’s will be a rate cut. That could explain the short-term strengthening of the dollar, but in the long-term analysts can’t agree if the dollar has hit rock bottom, or is just on a temporary rebound, aided by “momentum traders,” tough talk from the U.S. Treasury, and lower oil prices.
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