Fiscal Cliff

[forexpro 10]

:helloooo:

 

As a forex trader, should I be worried about the recent fiscal cliff? What effects will it have on the dollar? Who can accurately predict the fluctuations that will take place in the currency? Should we continue to hold our money in USD or should we look for alternative currencies like the Chinese Yuan or the Sterling Pound?

[Vinayak 10]

The good news is that you don't have to worry about the fiscal cliff for now, but I know exactly what your talking about. It is how will the USD do in the long term? In the short-term, the greenback has been on the ascent and in the past week it hit its two-and-a-half-year high. But there are several reasons why this is very temporary. And this is coming from one of the biggest fans of the US out there.

The fiscal cliff that you brought up was not handled well and it will rear its ugly head in the future forcing the US into another recession. Then we have the QE3 that is going on that will further soften the USD along with the discourse about lifting the debt ceiling that is very concerning. This brings me to the worst-case scenario of more rating agencies downgrading the U.S. to a AA rating.

[EXPERTMARS 10]

Hi ,

 

The fiscal cliff was resolved by not raising taxes , not excessively cutting spending, What his all means in short is that money printing will continue in full swing . The US debt will continue to grow . In February US will again hit the debt ceiling. There will again be the usual congress drama on whether to increase the debt ceiling. Again the discussions will go on till the last minute. Stock market will give a clear signal by starting a slide, that if debt ceiling is not raised it will crash . Finally the debt ceiling will be raised and markets will rally to all time highs .

 

All this is not good for the dollar , dollar will slide, commodities, oil,stocks will all rise.

 

Regards,

Ninad.