Anyone got a handle on why the USD is declining?

[Koolau]

Watching the financial porn stations this AM and one take is that the USD has been oversold and will rebound. Not smart enough to understand the logic, but that was their take - this AM. Probably different tomorrow, but I've had my "fix" for the month so I won't be watching. YMMV

 

[alaska55]

Expansionary policy elsewhere plus higher growth rates expected elsewhere. Thats also why the major rotation from US to foreign equities is happening. I'm concerned the US may be looking a lot like japan stuck in a low growth rut if we can't figure out a way to spur productivity and wage growth.

Well explain why low growth would make us go down against the Euro, at least we have some growth. The euro has no growth!

 

[USGrant1962]

There's a discussion on the US$ underway, so the threads were merged.

Here's a chart from the St Louis Fed which shows the value of the US$ over 20 years. https://fred.stlouisfed.org/series/TWEXB

Edit to add - the US$ is still close to it's high over that 20 year period.

That's why I've been buying international all year, including on Monday this week.

 

[Fermion]

Oh, and those of us with international investments will see our dollar net worth grow.

So, international investments like owning Apple, Google, Microsoft, Gilead?

It seems almost all large companies are dealing as much overseas as they are at home. I don't think you have to buy VWO to have some international protection for your dollar.

 

[Totoro]

Well explain why low growth would make us go down against the Euro, at least we have some growth. The euro has no growth!

Say what? The eurozone is growing faster than the US right now.

The USD is going down because growth elsewhere is picking up, monetary policy is easing off and there were some stability concerns causing people to flock to the USD for a while. It's now (in my silly view) roughly where it should be.

I believe the biggest effect was a temporary safe haven perception effect that's now worn off.

 

[DrRoy]

It also has to do in part with the perceived, relative economic prospects of the national pairings. It is not just that something new may be negative for the US, something may be seen as positive for the other country (or group in the case of the Euro).

 

[traineeinvestor]

I always come home from trips with a small stash of bills and coins. I like to have them so I don't have to worry about finding an ATM at the airport on my next trip.

You need to be a bit careful with keeping old notes and coins - central banks have a habit of withdrawing notes from circulation from time to time. I got caught out on my last trip to the UK when some notes from a previous trip were not accepted for payment (I had to go to a bank to change them) and I have notes in a variety of currencies that are utterly worthless for various reasons (fortunately not enough to get excited over).

 

[traineeinvestor]

With the US$ on a multiyear high (as pointed out above), there is better relative value elsewhere - I've moved some money into other currencies/investments already this year and am likely to continue doing so.

 

[bclover]

The reason is because I will soon be going to Europe for a month. [emoji51][emoji51]

Have a good time.

 

[braumeister]

You need to be a bit careful with keeping old notes and coins - central banks have a habit of withdrawing notes from circulation from time to time. I got caught out on my last trip to the UK when some notes from a previous trip were not accepted for payment (I had to go to a bank to change them) and I have notes in a variety of currencies that are utterly worthless for various reasons (fortunately not enough to get excited over).

Very true.
A few years ago I was getting ready for a trip and found an old envelope with some pound notes in it. I went to the internet and saw that they were still guaranteed by the Bank of England so I brought them along. Had to go to three different banks in London. The first two had young tellers who had never seen them before and didn't want to take a chance.

At the third bank it was the same story but at least he was willing to investigate. He got on the phone with someone and after a five minute conversation was convinced they were not a joke so he agreed to exchange them for pound coins.

The funny part is he gave me the coins out of his own pocket and put the notes in his wallet. Bet he had a good story that evening for his mates at the pub!

 

[marko]

Here's a chart from the St Louis Fed which shows the value of the US$ over 20 years. https://fred.stlouisfed.org/series/TWEXB

Edit to add - the US$ is still close to it's high over that 20 year period.

+1
I try to remember one of the key facets of finance: "Over the long term".

Whether the price of gas, bread or one's MF, price fluctuation is a fact of life. The dollar goes up, the dollar goes down. If you look at a day to day price you'll go crazy; stand back 20 feet from any chart to see a trend--if any.

 

[OldShooter]

So, international investments like owning Apple, Google, Microsoft, Gilead?

No, but trading FOREX directly certainly is. With unhedged international investing currency fluctuation is just one more variable in the equation. I have seen historical analyses that say that currency issues might add as much as 10% to volatility. In my case, since I believe the dollar will see a long-term decline, I see mostly upside.

I am no longer trading individual stocks, but I wouldn't touch any of those with a stick. IMO those stocks are for traders and the greater fool theory, not for investors. YMMV of course.

It seems almost all large companies are dealing as much overseas as they are at home. I don't think you have to buy VWO to have some international protection for your dollar.

Well, there are a lot of foreign companies that participate in the US market, too. BP, BAT, Inbev. The religion of Fama, French, Sharpe, Markowitz, et al preaches that "you have to hold the market portfolio" that's what I do. Both US and International. That decision is independent of the currency aspect. To your point, though, Bogle argues against needing any international exposure. So you takes your choice, I guess.

 

[Alan]

At the third bank it was the same story but at least he was willing to investigate. He got on the phone with someone and after a five minute conversation was convinced they were not a joke so he agreed to exchange them for pound coins.

Those pound coins go out of circulation in October. New pound coins made of 2 metals plus a hologram began to be issued in May.

The old paper £5 notes became illegal tender a month or 2 back (replaced by plastic ones with holograms). New plastic £10 notes will be issued later this year so the paper ones will be phased out over the next year or so.

 

[braumeister]

Those pound coins go out of circulation in October. New pound coins made of 2 metals plus a hologram began to be issued in May.

The old paper £5 notes became illegal tender a month or 2 back (replaced by plastic ones with holograms). New plastic £10 notes will be issued later this year so the paper ones will be phased out over the next year or so.

Thanks, Alan.
Since I have some of each, will they still be spendable on my next visit or will I have to go to a bank to exchange them?

 

[Danmar]

The central bank here finally started raising interest rates again after not doing so since Julius Caesar was on the throne.

Not a lot of an increase but combined with market sentiment and outside influences it seems to have pushed it up quickly in a short period.

Agree. Both central banks have increased rates by 25 bps. The Canadian economy is doing very well and that has helped, price of oil also has a big impact.

 

[Alan]

Thanks, Alan.
Since I have some of each, will they still be spendable on my next visit or will I have to go to a bank to exchange them?

The £5 notes will need to be exchanged at a bank now, £ coins after October/November. £10 notes can be spent at shops through Spring, 2018

 

[ShokWaveRider]

The £5 notes will need to be exchanged at a bank now, £ coins after October/November. £10 notes can be spent at shops through Spring, 2018

People will be emptying out their mattresses in the UK.

 

[braumeister]

The £5 notes will need to be exchanged at a bank now, £ coins after October/November. £10 notes can be spent at shops through Spring, 2018

Thanks, Alan.
This is such a pain in the butt!
But I'm glad they are at least dealing with the problem sensibly.

 

[USGrant1962]

The £5 notes will need to be exchanged at a bank now, £ coins after October/November. £10 notes can be spent at shops through Spring, 2018

Are the £20 notes unaffected?

I have a couple of those along with a fiver, a ten, and some coins in a ziplock bag (with my Oyster card). DS1 may be headed that way in the next month so I'll probably give my stash to him.

 

[Alan]

Are the £20 notes unaffected?

I have a couple of those along with a fiver, a ten, and some coins in a ziplock bag (with my Oyster card). DS1 may be headed that way in the next month so I'll probably give my stash to him.

The plan from the Bank of England is to begin issuing new plastic £20 notes in 2020, and it is usually within 6 months of issue that the old currency must be exchanged at a bank and cannot be used in shops.