Strong Dollar Good News for the U.S. Economy

The United States recession behind us, evidence supports an economic recovery and strong U.S currency compared to our trading partners around the world: Improved economic news including lower unemployment rate, increase productivity and short term interest rates climbing. A strong U.S Dollar is deflationary, imported cost of goods and precious metals. However, U.S. Dollar less influences the cost related to imported crude oil, supply and demand is the major concern. Consumers and Investors (domestic & foreign) derive financial savings and rewards from a strong domestic currency. The outlook for the United States could post a surplus.

Cost of precious metals including gold & silver influenced by the direction of the U.S. Dollar. In 2010, investors flocked to buy gold and silver as a hedge against inflation, when the U.S. Dollar depreciated in value on bad economic news, and global economic concerns. Recent improved U.S. economic news is bullish news for the U.S. currency: 9.4 percent unemployment report for December 2010 (Compared to a high of 10% in January 2010. 1), and increase labor productivity of 2.3 percent in the third quarter of 2010 (reported by the Bureau of Labor Statistics) 2.Unfortunately for gold and silver investors, U.S. Dollar appreciation during good economic times, adversely pressures the price of precious metals down. However, investors will bid-up the price of gold and silver, during times of financial and sovereign debt crisis around the world. In the beginning of the New Year (2011), speculation Europe's debt plight would spread throughout the hemisphere, escalated the price of precious metals. 7

In 2010, depreciation in the US currency increased the cost for imported goods, especially crude oil. "Since reaching a one-year high on June 7 of last year (2010), the dollar has fallen about 6.2 percent against a trade-weighted basket of major currencies, making imported goods more expensive (Increase 4.8% in 2010)". 8 If the U.S. Dollar appreciates in 2011, fortunately one less influential factor for high crude oil prices. However, economically supply and demand concerns for crude oil over-shadow savings from a strong currency. Expecation in 2011, consumer inflationary concerns for imported goods subside as our domestic currency appreciates. "But it would also make U.S. products more expensive in foreign markets, dulling businesses' competitive edge." Americans vacationing or traveling outside the United States (2011) benefit from a stronger United States currency: Bargains purchasing goods, services and visiting resorts in Europe. 6

Historically when a country's currency valuation rises, foreign investors flock to buy the country's hard and soft assets, since the currency exchange provides an opportunity for a financial reward. If foreign investors believe the U.S. economy has shifted in a positive direction, no doubt the future for U.S. financial markets, real estate market and businesses favor foreign capital investments (Inflows): Outlay of foreign capital investments will turn profitable, as the U.S. Dollar appreciates over time. 4 During the Reagan Administration, upward pressure on the U.S. Dollar influenced by interest rate increases helped finance government deficits: In - flow of foreign capital and low priced imports. 3

"Currency analysts at Wells Fargo Bank predict that over the next 12 months (2011), the dollar will rise 7 percent against the yen, more than 4 percent against the euro and 1 percent against the pound. 5 A strong U.S. Dollar contributes to a vibrant economy by increase consumer spending, consumption, and decrease in the unemployment rate, as demand for goods and services increase. Also, tax revenue collection increases from corporate profits and individual income, as the U.S. economy steadily improves. Profits earned by foreign investors (Selling hard & soft assets) add to tax revenue collections. If the United States Congress is willing to curtail their spending desires and tax revenues increase in coming years: Budget for the United States has a good chance to be cut and report again a surplus, underlying the relative strength of the United States Dollar.

References:

1.) United States Unemployment Rate - http://www.tradingeconomics.com/Economics/Unemployment-Rate.aspx?Symbol=USD

2.) Productivity and Costs, Third Quarter 2010, Revised - http://www.bls.gov/news.release/prod2.nr0.htm

3.) Could a Strong Dollar Be Ahead? - http://seekingalpha.com/article/228482-could-a-strong-dollar-be-ahead

4.) Stronger Dollar Good or Bad For the US? - http://www.gocurrency.com/articles/stronger-dollar.htm

5.) US dollar seen rising in 2001 after rough 2010 - http://www.deseretnews.com/article/700096491/US-dollar-seen-rising-in-2011-after-rough-2010.html?s_cid=rss-14

6.) US dollar seen rising in 2011 after rough 2010 - http://finance.yahoo.com/news/US-dollar-seen-rising-in-2011-apf-3958848384.html?x=0&sec=topStories&pos=4&asset=&ccode=

7.) God, Silver Rise on Mounting Demand for Haven Amid Portugal Debt Concern - http://www.bloomberg.com/news/2011-01-11/gold-may-climb-as-recovery-concern-spurs-demand-for-alternative-investment.html

8.) Import Prices in U.S. Rose 1.1% Last Month, Led by Higher Fuel, Food Costs - http://www.bloomberg.com/news/2011-01-12/import-prices-in-u-s-rise-1-1-in-december-led-by-fuels-food.html

The United States recession behind us, evidence supports an economic recovery and strong U.S currency compared to our trading partners around the world: Improved economic news including lower unemployment rate, increase productivity and short term interest rates climbing. A strong U.S Dollar is deflationary, imported cost of goods and precious metals. However, U.S. Dollar less influences the cost related to imported crude oil, supply and demand is the major concern. Consumers and Investors (domestic & foreign) derive financial savings and rewards from a strong domestic currency. The outlook for the United States could post a surplus.

Cost of precious metals including gold & silver influenced by the direction of the U.S. Dollar. In 2010, investors flocked to buy gold and silver as a hedge against inflation, when the U.S. Dollar depreciated in value on bad economic news, and global economic concerns. Recent improved U.S. economic news is bullish news for the U.S. currency: 9.4 percent unemployment report for December 2010 (Compared to a high of 10% in January 2010. 1), and increase labor productivity of 2.3 percent in the third quarter of 2010 (reported by the Bureau of Labor Statistics) 2.Unfortunately for gold and silver investors, U.S. Dollar appreciation during good economic times, adversely pressures the price of precious metals down. However, investors will bid-up the price of gold and silver, during times of financial and sovereign debt crisis around the world. In the beginning of the New Year (2011), speculation Europe's debt plight would spread throughout the hemisphere, escalated the price of precious metals. 7

In 2010, depreciation in the US currency increased the cost for imported goods, especially crude oil. "Since reaching a one-year high on June 7 of last year (2010), the dollar has fallen about 6.2 percent against a trade-weighted basket of major currencies, making imported goods more expensive (Increase 4.8% in 2010)". 8 If the U.S. Dollar appreciates in 2011, fortunately one less influential factor for high crude oil prices. However, economically supply and demand concerns for crude oil over-shadow savings from a strong currency. Expecation in 2011, consumer inflationary concerns for imported goods subside as our domestic currency appreciates. "But it would also make U.S. products more expensive in foreign markets, dulling businesses' competitive edge." Americans vacationing or traveling outside the United States (2011) benefit from a stronger United States currency: Bargains purchasing goods, services and visiting resorts in Europe. 6

Historically when a country's currency valuation rises, foreign investors flock to buy the country's hard and soft assets, since the currency exchange provides an opportunity for a financial reward. If foreign investors believe the U.S. economy has shifted in a positive direction, no doubt the future for U.S. financial markets, real estate market and businesses favor foreign capital investments (Inflows): Outlay of foreign capital investments will turn profitable, as the U.S. Dollar appreciates over time. 4 During the Reagan Administration, upward pressure on the U.S. Dollar influenced by interest rate increases helped finance government deficits: In - flow of foreign capital and low priced imports. 3

"Currency analysts at Wells Fargo Bank predict that over the next 12 months (2011), the dollar will rise 7 percent against the yen, more than 4 percent against the euro and 1 percent against the pound. 5 A strong U.S. Dollar contributes to a vibrant economy by increase consumer spending, consumption, and decrease in the unemployment rate, as demand for goods and services increase. Also, tax revenue collection increases from corporate profits and individual income, as the U.S. economy steadily improves. Profits earned by foreign investors (Selling hard & soft assets) add to tax revenue collections. If the United States Congress is willing to curtail their spending desires and tax revenues increase in coming years: Budget for the United States has a good chance to be cut and report again a surplus, underlying the relative strength of the United States Dollar.

References:

1.) United States Unemployment Rate - http://www.tradingeconomics.com/Economics/Unemployment-Rate.aspx?Symbol=USD

2.) Productivity and Costs, Third Quarter 2010, Revised - http://www.bls.gov/news.release/prod2.nr0.htm

3.) Could a Strong Dollar Be Ahead? - http://seekingalpha.com/article/228482-could-a-strong-dollar-be-ahead

4.) Stronger Dollar Good or Bad For the US? - http://www.gocurrency.com/articles/stronger-dollar.htm

5.) US dollar seen rising in 2001 after rough 2010 - http://www.deseretnews.com/article/700096491/US-dollar-seen-rising-in-2011-after-rough-2010.html?s_cid=rss-14

6.) US dollar seen rising in 2011 after rough 2010 - http://finance.yahoo.com/news/US-dollar-seen-rising-in-2011-apf-3958848384.html?x=0&sec=topStories&pos=4&asset=&ccode=

7.) God, Silver Rise on Mounting Demand for Haven Amid Portugal Debt Concern - http://www.bloomberg.com/news/2011-01-11/gold-may-climb-as-recovery-concern-spurs-demand-for-alternative-investment.html

8.) Import Prices in U.S. Rose 1.1% Last Month, Led by Higher Fuel, Food Costs - http://www.bloomberg.com/news/2011-01-12/import-prices-in-u-s-rise-1-1-in-december-led-by-fuels-food.html