How Low Will The U.S. Dollar Go?

0
How Low Will The U.S. Dollar Go?

How Low Will The U.S. Dollar Go? by Jeff D. Opdyke, The Sovereign Investor.

Last week, I wrote to you about the beginning of the end of U.S. dollar strength.

The Fed’s words and its internal projections are very clear that interest rates are going to rise at a slower pace than most observers expect, and the ultimate destination is lower than most observers assume. That now has at least one Wall Street firm (Goldman Sachs) telling its clients that the Fed might launch the interest-rate upcycle with a “mini” hike that is less than the 0.25% the world expects — echoing what I first laid out in August to readers.

The upshot is a weaker dollar — which means stronger foreign currencies and rising values for foreign assets.

Massif Capital’s Top Short Bets In The Real Asset Space [Exclusive]

Screenshot 2022 08 10 18.57.51 1Since its founding by Will Thomson and Chip Russell in June 2016, the Massif Capital Real Asset Strategy has outperformed all of its real asset benchmarks. Since its inception, the long/short equity fund has returned 9% per annum net, compared to 6% for the Bloomberg Commodity Index, 3% for the 3 MSCI USA Infrastructure index Read More

But the question to answer is: How low does the dollar ultimately go when the reversal is in full force?

If the Fed begins raising rates with a mini hike it will send a very strong message. The message: That we, the Fed, realize America cannot afford a strong dollar because of the negative implications on a U.S. economy that remains weak in the knees. Exporters are already feeling the pain, with many reporting negative currency adjustments to their profits. Corporate earnings are already suffering and are likely headed for an “earnings recession” because of this (which would send U.S. stock markets lower). And foreigners cannot afford t