With the US dollar doing so well against the yen and the peso, I was thinking maybe it was time to buy a new car, and to stock up on some Corona—several extra cases at least—because I like new cars, and I have some friends who like Corona.
I started thinking in that direction when I was reminded that our top four trading partners are Canada, Mexico, China, and Japan—in that order. . .
. . . and was also reminded that the dollar has risen 15% against the yen and the peso since January 2000. That’s good news for consumers like me. (Click to enlarge:)
It’s also true that the US dollar has slipped a little against the Canadian dollar, and recently against the yuan (since the Chinese relaxed the dollar peg just a little); that’s good news for Canadian and Chinese consumers, who can now afford more of our exports. It’s also good for anyone who fears the US trade deficit. (I see no reason to, so I don’t, but I'm in the minority.)
I wonder why little to none of this good news is making headlines in the mainstream media? I wonder why all their articles are so hysterical about the supposed arrival of US-dollar-doomsday, just because the euro is rising against most currencies?
I’ll contemplate those oddities as I’m browsing around in the Toyota and Lexus dealers in the next few weeks.
Your points about the hysteria over the weakening dollar are well taken, but does this data tell the whole story? To be more specific, the USD Index is at 83.10 this morning, which is rather low by historical standards. Sooner or later, the currencies that peg to the dollar (OPEC countries,in particular, and China, indirectly) would want to adjust.
Also, do your numbers take into account our oil imports?
Posted by: SalvatoreM | 12 December 2006 at 07:32
Those four countries represent 49% of our trade. Also, Canada and Mexico are our top 2 oil suppliers, both ahead of Saudi Arabia.
Posted by: Steve | 12 December 2006 at 10:35
really good budget deficit numbers out this month from treasury...moves forward balanced budget to nov 2008 from mid 2009. YoY outlays up only 6.8%, inflows up 12.1%
jp
Posted by: jp | 12 December 2006 at 14:38
Steve, I appreciate your point about the dollar, but are you at all worried about what a weak dollar might signify, mainly, an overly expansionary inflation rate? I'm of the opinion that exchange rates are one of the best indicators of the real supply of money, because M1, M2, and M3 all fail.
Posted by: Jon Thompson | 16 December 2006 at 00:29