The greenback got a vote of confidence today. Muhammad
al-Jasser, Vice-Governor of the Saudi Arabian Monetary Agency, said it wouldn’t
forsake the U.S. dollar peg unless it fell 30%.
So if Saudi Arabia sticks to its word, then it won’t be
forsaking the U.S. dollar peg anytime soon. A 30% fall would be huge because
the buck is already hovering around 30 year lows.
So that’s almost ensuring that the world’s largest oil
producer WON’T forsake the buck in the upcoming year or two.
The Buck is unlikely to fall 30% more from these 30 year lows.
With the Euro being close to historic highs, it probably
doesn’t have much further that it can rise. However, with the buck being so
beaten down, it could rise quite a bit and still be low from a historic stand
point.
So this vote FOR the buck is basically a vote AGAINST the
euro because if they diversified away from the U.S. dollar, then they would
probably go to a basket of currencies. That basket would most likely be heavily
weighted in the euro.
Sean Hyman
Editor/Trader, www.money-trader.com
Comments