Interest Rates
As was discussed in the November 3 blog (http://gordonfeil.blogspot.ca/2016/11/election-bombs-and-closing-casino.html)
USA interest rates are probably going to be heading up soon. Most likely next
month. The very recent strength of the U.S. dollar appears to be expecting this
interest rate boost. I don’t think that the USA economy has the strength to
support much of a rate increase, but I wouldn’t be surprised if next month’s is
only the first of several rate hikes by the Federal Reserve. This is unlikely
to be anything but hard on the real estate market. And a collapse in real
estate prices often happens 2 or 3 years before or after a stock market crash
(see http://gordonfeil.blogspot.ca/2016/11/are-polls-valid.html).
We are seeing upwards pressure on interest rates in
Canada also. This will likely help stem the drop of the price of the Dollarette
against the Dollar. Not good news for our real estate market. Well, maybe for
buyers once the air starts leaking out of market prices.
Dollar Strength
The big currency pair in forex trading is the EUR/USD.
The Euro has fallen hard lately. Day after day after repetitive day. 11
straight trading days of sliding for the Euro. Yesterday was the 11th
consecutive lower close for the Euro in terms of the U.S. Dollar, but the slide
may be over temporarily. We are seeing something close to the lows of late
2015. Maybe those lows are a floor. We’ll see. Late in the week, various fairly
reliable momentum indicators seemed to be saying the slide in the Euro is temporarily
done. A two or three cent bounce would be no surprise, but I think such a
bounce would be short lived. The dollar is the go-to currency in crisis times,
and the action lately suggests that people are scared.
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