Will the US dollar strengthen or weaken against the Euro in 2011?

[ragevein]

For those with financial acumen, what is your best guess on how the dollar will fare against the Euro in 2011?   

[tpfkaw]

If the Republicans take the Senate: strengthen
If they don't: weaken

[Mr.Phips]

Weaken if the fed does more quantitative easing, which is likely. 

[RIP Robert H Bork]

Strengthen, although it's more the euro that I expect to weaken against the dollar.

[Fmr President & Senator Polnut]

It's at 0.96 against the Australian dollar... there are predictions it will reach $1.20.... US holiday, here I come!

Most of the economist believe that a change in congress will make little difference.

[Frink]

Weaken if we don't begin to experience Deflation.

[opebo]

It will weaken in spite of deflation in the US.

[angus]

For those with financial acumen, what is your best guess on how the dollar will fare against the Euro in 2011?  

Not that I have any financial acumen, but my guess is that with austerity measures in the US, it stays pretty much at 1.30 dollars per euro.  Without spending cuts, it probably weakens further.

But they're both moving targets, so it's a hard one to pin down.  When the euro was introduced ten years ago, it was $1.17 per euro.  Then the euro quickly fell about 75 cents and stayed there for a while.  Germans were bitching and whining about it.  Then, it started to slowly rise, reaching parity and staying there for a while.  In fact, the last time I purchased euro was when I moved to Amsterdam in the fall of 2002.  I traded exactly 600 dollars for exactly 600 euro in a little bureau d'change on the Damrak.  And for the several months I worked there, it stayed at more or less one dollar per one euro.  Then the euro started to rise again, getting back to $1.17 within a year.  Then, the US entered a weak dollar period.  The thought was that by intentionally weakening the dollar against other currencies, we'd have less trade deficits--and we have the unmitigated gaul to hassle China!--and I thought at the time it was a bad idea.  Still do.  Anyway, with that, over a five-year period the dollar began to fall, while at the same time the euro was rising.  I think it got up to around $1.65 at some point.  Then some troubles befell some mediterranean countries, or should I say, some long-standing troubles were being finally exposed, then the euro fell to about $1.25.  Now, the euro has crept up.  Actually the euro has held steady and the dollar has been declining for a month or so.  It's about $1.37 or so today.  Whether it stays there, or falls or rises, depends very much on what happens both here and in the various markets of Europe.  I expect that over the long term some equilibrium will be reached, but it won't be at the introduction rate of $1.17 per euro, but probably more like $1.30 or so if austerity measures are enacted here and there simultaneously.

[angus]

opebonomics 101:

It will weaken in spite of deflation in the US.

I'm calling it.  We're close enough to the end of the year.  

probably more like $1.30 or so

Today it's about 1.33 dollars per euro, so I wasn't too far off the mark.   (pun intended)


Most astute:

Strengthen, although it's more the euro that I expect to weaken against the dollar.

[Wonkish1]

I'm to assume that you are referring to between now and New Years?

Well if the Euro zone succeeds in avoiding some issues coming up in the next few weeks it will largely stay the same(maybe slight US weakening against the Euro).

But if those problems do end up playing out in the next few weeks your going to see some serious moves(serious meaning higher than normal which is still not much movement considering we're talking currency here not BofA) in the dollar(and the rest of the world) strengthening against the Euro.

[angus]

I'm to assume that you are referring to between now and New Years

Well, I guess you could assume that, although it'd be a faulty assumption.  Or maybe it would be a good one.  I guess I'm not clear on the purpose of your assumption.  The OP referred to "in 2011" and I assumed that he was referring to the period Jan 1 through Dec 31, inclusive.  We're more than 90% through that period, and I don't often get a chance to boast, so I'm making mine now before things change.

My only point was that a year ago someone posed a question, and I was one of the few who predicted correctly at that time, more than a year ago, that the dollar/euro exchange would remain relatively steady at 1.30 to 1.  (I have a terrible record of predictions, by the way, with regard to elections, judicial appointments, and most other items that make the threads hereabouts.  This is the first time I've ever got to brag about anything, so let me have a little break, will ya?)

Admittedly, officepark's concise analysis was probably the most prescient.  By that I mean I think that both currencies have fallen relative to some emerging markets. 

[Wonkish1]

I'm to assume that you are referring to between now and New Years

Well, I guess you could assume that, although it'd be a faulty assumption.  Or maybe it would be a good one.  I guess I'm not clear on the purpose of your assumption.  The OP referred to "in 2011" and I assumed that he was referring to the period Jan 1 through Dec 31, inclusive.  We're more than 90% through that period, and I don't often get a chance to boast, so I'm making mine now before things change.

My only point was that a year ago someone posed a question, and I was one of the few who predicted correctly at that time, more than a year ago, that the dollar/euro exchange would remain relatively steady at 1.30 to 1.  (I have a terrible record of predictions, by the way, with regard to elections, judicial appointments, and most other items that make the threads hereabouts.  This is the first time I've ever got to brag about anything, so let me have a little break, will ya?)

Admittedly, officepark's concise analysis was probably the most prescient.  By that I mean I think that both currencies have fallen relative to some emerging markets.  

Well it doesn't really matter because the exchange rate at the beginning year is pretty much the same as it is today(so I'll give you credit to being pretty damn close today, although it didn't stay here there was huge volatility and weakening in the dollar for most of the year before the recent fall in the Euro).

Of course both currencies have fallen against the rest of the worlds currencies. That is something you can look up you know.

[opebo]

opebonomics 101:

It will weaken in spite of deflation in the US.

It was just a guess, and I never said by a lot.  And certainly the deflation is still going on in the US due to inadequate spending.

[Ban my account ffs!]

opebonomics 101:

It will weaken in spite of deflation in the US.

It was just a guess, and I never said by a lot.  And certainly the deflation is still going on in the US due to inadequate spending.

Prices are rising and inflation is the highest it has been in 3 years at the moment... but, as has been the case since the early 1970s, wages are not keeping pace with inflation.. so purchasing power continues its slide for the vast majority of Americans. 

But that inflation has nothing to do with "quantitative easing"... anybody who thinks so is a dolt.  It all has to do with scarcity of staple grains and oil.  Consumer electronics prices have not inflated.  Nor really anything except the basic staples that Americans spend more and more of their declining incomes on.

The 1% is quickly realizing their goal.  But I still have to wonder who they think is going to buy their products when we're all broke and broken.

[opebo]

Prices are rising and inflation is the highest it has been in 3 years at the moment... but, as has been the case since the early 1970s, wages are not keeping pace with inflation.. so purchasing power continues its slide for the vast majority of Americans.  

I was referring to housing prices, which are more important than the cost of the incidentals you mention.

[Wonkish1]

opebonomics 101:

It will weaken in spite of deflation in the US.

It was just a guess, and I never said by a lot.  And certainly the deflation is still going on in the US due to inadequate spending.

Prices are rising and inflation is the highest it has been in 3 years at the moment... but, as has been the case since the early 1970s, wages are not keeping pace with inflation.. so purchasing power continues its slide for the vast majority of Americans. 

But that inflation has nothing to do with "quantitative easing"... anybody who thinks so is a dolt.  It all has to do with scarcity of staple grains and oil.  Consumer electronics prices have not inflated.  Nor really anything except the basic staples that Americans spend more and more of their declining incomes on.

The 1% is quickly realizing their goal.  But I still have to wonder who they think is going to buy their products when we're all broke and broken.

You have no idea what your talking about!

[opebo]

But that inflation has nothing to do with "quantitative easing"... anybody who thinks so is a dolt(1).  It all has to do with scarcity of staple grains and oil. 

You have no idea what your talking about!

Very good counterargument, Wonkish.  But I see he already has your number (1).

[Wonkish1]

But that inflation has nothing to do with "quantitative easing"... anybody who thinks so is a dolt(1).  It all has to do with scarcity of staple grains and oil. 

You have no idea what your talking about!

Very good counterargument, Wonkish.  But I see he already has your number (1).

Wow you actually think his post was an argument? LOL, sure!

I have made numerous posts on here showing explaining the money supplies effect on prices. People that don't think that an increased money doesn't result in higher prices don't know a thing about markets, the economy, or the causes of inflation.

[opebo]

Wow you actually think his post was an argument? LOL, sure!

I never said that, I merely pointed out that you didn't bother to make anything more than an assertion.

I have made numerous posts on here showing explaining the money supplies effect on prices. People that don't think that an increased money doesn't result in higher prices don't know a thing about markets, the economy, or the causes of inflation.

Or not lower prices - that's the key, Wonk - in a deflationary depression QE makes prices fall less or 'less low', not higher.  Preventing deflation rather than causing inflation.

[Wonkish1]

Wow you actually think his post was an argument? LOL, sure!

I never said that, I merely pointed out that you didn't bother to make anything more than an assertion.

I have made numerous posts on here showing explaining the money supplies effect on prices. People that don't think that an increased money doesn't result in higher prices don't know a thing about markets, the economy, or the causes of inflation.

Or not lower prices - that's the key, Wonk - in a deflationary depression QE makes prices fall less or 'less low', not higher.  Preventing deflation rather than causing inflation.

Well one hole in that is that it is an indisputable fact that we are currently experiencing some inflation right now not deflation no matter how you decide to measure it.

[Napoleon]

opebonomics 101:

It will weaken in spite of deflation in the US.

It was just a guess, and I never said by a lot.  And certainly the deflation is still going on in the US due to inadequate spending.

Prices are rising and inflation is the highest it has been in 3 years at the moment... but, as has been the case since the early 1970s, wages are not keeping pace with inflation.. so purchasing power continues its slide for the vast majority of Americans. 

But that inflation has nothing to do with "quantitative easing"... anybody who thinks so is a dolt.  It all has to do with scarcity of staple grains and oil.  Consumer electronics prices have not inflated.  Nor really anything except the basic staples that Americans spend more and more of their declining incomes on.

The 1% is quickly realizing their goal.  But I still have to wonder who they think is going to buy their products when we're all broke and broken.

Purchasing power is certainly diminished...