The main driver of the dollar is profit opportunities.
When a country loses its competitiveness and productivity advantage, profits decline.
The decline of profit opportunities forces investors to sell the currency and seek more attractive countries and currencies.
This is what is happening to the US since 2004. The dollar has been sliding not because of all the nonsense you hear on the business channels. The main reason is that our productivity and profits (click on the chart to enlarge it) have declined since then.
The dollar will strengthen when our productivity will grow faster, we become more competitive, and profits after tax will grow at a strong pace.
To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.
I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.
George Dagnino, PhD
Editor, since 1977
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