The Dollar Has Further To Fall

As everyone knows it’s been about the dollar for some time now, but it’s always about something, right? The scary thing is that most of us use the DXY or $USDX or, even more misleading, the $UUP to track the dollar’s dive. Instead, I suggest that a look be given to the trade weighted dollar index of major currencies. This data compares the Dollar against a basket of major foreign currencies and Marc Chandler does a good job here explaining it.

Bottom line is that if the current correlation between the all mighty Dollar and equities continues then the Dollar has about a 6% drop left to get back to the 2008 levels. That’s right, more downside potential. The best “bang for your buck” would come from companies that get a majority of their income (sales) outside the US. The Dollar will continue to fall as long as DC continues to show a lack of fiscal discipline. The scary thing is that this past week saw that with every $1 the government received nearly $2.30 went out giving us a nice $1.4 trillion deficit.