The US dollar index will add to its recent gains on Monday due to the devaluation of the Euro based on an anticipated sell-off as soon as the markets open. Germany, France and Italy are holding meetings with Greece to resolve the collapse and subsequent bailout of this country. Greece is rumored to be leaving the European Union but they have denied leaving the EU and also the re-institution of the former Greek currency, the drachma.
Although the US dollar will strengthen on this news, there is no actual increase in the value of our currency. As always, check your assumptions and facts:
- The United States is bankrupt by a factor of over 60% of our assets.
- Congress will not act to implement a debt ceiling or cut spending by the trillions necessary to strength our dollar.
- The Federal Reserve has no ammunition left to impact the economy since the discount rate is still effectively zero.
- The Treasury is still printing dollars that depreciate our currency.
Compare the value of our dollar against the Swiss franc if you want to get a true value on our dollar.
David DeGerolamo
Eurozone fights to contain crisis amid new bid to rescue Greece
Single currency expected to plunge after chaotic weekend that saw emergency talks on restructuring of nation’s debts.
Eurozone finance ministers are battling this weekend to contain a mounting sense of crisis about the future of the single currency as details emerge of secret talks on restructuring Greece’s debts.
Analysts expect a sharp sell-off of the euro when markets open tomorrow morning, as investors digest the fallout from reports – swiftly scotched – that Greece was considering leaving the eurozone.
“Perhaps we have crossed a rubicon,” said Jonathan Loynes, European economist at Capital Economics. “The knee-jerk response will probably be to push the euro lower. I believe the euro should be at parity with the dollar, not at $1.44 – I don’t know what it’s doing at anything like these levels.”
Euro policymakers at first denied that a meeting was taking place, but were later forced to admit that the German, French and Italian finance ministers had been holed up in a chateau in Luxembourg with their Greek counterpart George Papaconstantinou, discussing options for dealing with Greece’s unsustainable debt burden.
Rumours swept through financial markets late on Friday that Greece was threatening to leave the eurozone and reintroduce the drachma, but that was furiously denied by Athens yesterday.
