Gnutrade is all interesting. Its a Financial Game
Its quite a long time that I have not been concentrating on the indices specially the favorite FTSE. I saw that the current trend in the market is quite fluctuating. And specially the U.S stock market is all ups and downs. Japanese Yen which was the prey to carry trades is now all set and harldy I can watch the carry trade news on Yen in Newspapers. Yen is all relieved now. But then why is the U.S stock market undergoing a cyclical-change? The major reasons for the dollar value getting lesser and lesser is the real-estate industry in United States. The demand for housing market has been declining at an uninterrupted rate and the subprime losses have got the momentum. The Federal Reserve has been taking steps to curb out this problem and protect its economic structure.
Take the case of 2004, there was continuous depreciation in the U.S dollar value and later it was in a high-standard. And now again in 2008, the value is near to the ground. U.S interest rates cut will definitely have a direct impact on the U.S economy. Gold and Oil commodity markets are nothing to do with the U.S dollar value. Since Oil is denominated in dollars therefore a change in the price of a barrel does not affect the value of a dollar.
The swings in the currency value increases instability in the world economy by impeding international trade and investment because of rising uncertainity. Some feel that the dollar’s fall is good because it makes the U.S exports less expensive and that the higher demand may cut the trade deficit costs. The downside of low-value dollar is that it makes all the imports that they consume are more expensive, including raw material and parts used by U.S. businesses, and makes it costlier for U.S. dollar holders to travel or invest outside the U.S. A continued drop in the dollar's value could destabilize the international economy, leading to a worldwide recession. So Federal Reserve should re-think on interest rates and the credit flow pattern and the investment areas to stabilize the economical activity in U.S.A
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