Forex, Oil, Banks, & The Dollar

What a web we (the US) weave. This is a most interesting time in the currency world. Has the oil bubble burst? Is the US economy hit rock bottom? Will the dollar regain its place in world economics? I do not pretend to know the answers to any of these questions, I really do not care. As a forex trader I just trade what I see. All traders should trade what they see. The fundamentals behind all of these questions are fascinating and do play a part in my overall strategy. Notice in a previous post I recommended to be careful of any long term dollar short. I still hold that view. I do believe we will see the greenback start to gain back some of it's prestige. The thing you must remember is it's in the best interest of almost everybody to have a strong dollar. Notice recent reports out of the Eurozone, they want a stronger dollar. China wants a stronger dollar as they have a fortune in dollars and a weak buck makes no sense for them, it lessens there holdings.

Has the oil bubble burst? I believe what you are seeing is a technical pull back. I do believe we are near the top of the range for oil but I don't believe we'll see any kind of burst. Remember where oil was last year at this time and give it some thought. Is this recent pullback the bubble bursting? No, oil would have to fall quite a bit more for any talk of bubble bursting to make any sense. What will be the downfall of oil is the renewed efforts to lessen the dependence on oil. This is what the Saudi's are worried about. I see it in everyday conversation with ordinary people.

There is still much pain to be felt in the US economy as more banks will fail because of the mortgage mess and unemployment will remain high. However, the worst may be over for the US economy. Now it's time for other world economies to feel the pain. We(USA)are already dealing with these issues, the rest of the world will have to deal with them too.