Canadian energy, mining and financial stocks are jumping higher, and for U.S. investors, a declining dollar multiplies these gains.
Stockmarkets, already rattled by a declining dollar, fell: traders worried that higher oil prices might slow global economic recovery.
If you will recall, the declining dollar was a big part of the QE II trade that was all the rage from September 1st through November 5th.
That would promote job creating investment in the U.S. at home and from abroad, as investors would know they would not suffer losses from a declining dollar.
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Or a hedge against a declining dollar.
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But that cheap dollar policy actually only discourages the investment in America essential to getting the economy booming, as investors fear lower returns from a declining dollar, inflation, and the boom and bust cycles that such policies cause.
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Both companies are South African, and O'Brien likes the fact that the rand is declining versus the dollar, which improves profitability for South African miners.
And it would mean China could continue to buy US Treasury securities at a cheaper price to make up for the declining value of the dollar, which hit a new low for the past several decades today.
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Import prices for miscellaneous manufactured articles, from which China derives the bulk of its trade surplus with the U.S., are still declining, despite the weaker dollar.
Toyota also felt the hit of foreign currency translation, as the yen strengthened on heightened risk aversion as investors sought protection given instability in Europe and a declining U.S. dollar.
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They have flocked there for 30 years, especially recently, when the declining value of the Australian dollar made it one of the last places where they could enjoy a cheap holiday abroad.
"The Nasdaq 100 will test September's lows in late May, but in the fall it will actually set new lows, " says Jimerson, who cites a declining U.S. dollar and a burgeoning real estate bubble as ominous signs for equities.
The absence of a credible alternative to the dollar means that, despite its declining value, its status as the world's reserve currency is not seriously under threat.
Take another period characterized by extreme volatility and fear, when there was conflict in the Middle East, oil-related inflation shocks, declining value in the U.S. dollar, rising U.S. unemployment and a strong resolve from the Fed to act aggressively.
Samsung Electronics' stock has not enriched executives much: It has fallen by 45% in dollar terms (35% in won) in the past 12 months, declining in step with the Korean Composite Index (see The Korea discount).
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