The Weak Dollar

The Dollar weakened against most of the World's Currencies this week.

The euro (EUR-) pushed past $1.33 temporarily, hitting a record high for the fourth successive day, before sliding back to around $1.3235.

The dollar touched a 4-1/2 year low of 102.12 yenbefore pulling back to just around 103 yen.

Sterling (GBP-) rose to within a cent of a 12-year high at $1.9040 after Bank of England chief economist Charles Bean warned that the dollar slide could have further to run, but faded to around $1.8910 in afternoon trade. (Italics all quotes from Reuters, lgl)

The weak Dollar may seem like a Trade advantage to American Business and the Federal Government, but there are complications forestalling Trade advantage. The matrix of Production materials necessary for output may be advancing in Cost faster than American Product are becoming cheaper in foreign markets:

The price of OPEC's basket of crudes has held above its target of $22-$28 for the whole of this year, but if the basket is converted into euros, it has largely stayed within range.

The Above quote simply states that Production Costs (at least as far as energy) are not going up for the EU. A similar pattern could possibly be found in the raw materials arena. Stasis here would mean that the EU is not just holding it's own, but actually gaining in Trade advantage against the United States, when nominal financial charges are added into the matrix. The fact would seem equally true against the Asian Currencies, as the Japanese Yen matched the Euro in response to the weak Dollar. lgl