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RBS Global Head of FX Strategy Robert Sinche on the outlook for the U.S. dollar and how it reflects the economy’s outlook.
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Talking of which DUS dollar extending gains since pathetic -- extending gains today pushing the zero to another two year low but the question is is a stronger dollar.
Always good for the US economy.
And besides that what's the trade for you is an investor we have a strategist who says.
Look it's not always the case that a stronger dollar is good or bad -- inches RBS global head of FX strategy.
-- Bob everyone always debates whether a strong dollar is good or bad for US companies the US economy you stand on that very simple question.
Well -- fourth -- not a simple question not relate.
You know -- a dollar moves up and down there are winners and there are losers in that process and I think that's -- you.
As -- implicated it's difficult to draw firm conclusion one way or the other.
Look -- a dollar against stronger purity importer.
-- consumer.
You're better off.
And if -- -- exporter you'll find topic little bit more challenging.
And reversed -- the dollar weakens you know when the Fed did get a QE2 back in Natalie 2010 and early 2011.
They thought they are stimulating the economy.
Instead we saw this huge rising commodity prices food prices oil prices which really -- the consumer so.
The you know that was a situation where fed easing have brought about a much weaker dollar much higher commodity prices I don't know whether they help the economy are not.
But it is still the reserve currency and about the -- member wasn't that long ago -- once cent to get the dollar as the world's reserve currency we should go to the euros.
How silly does that sound right now but does that reflect the strength of the US economy that at least.
The -- up being stronger reflects of the US economy as a whole is still the number one economy in the world.
Well you know it is -- it is the world's largest economy and I say at a relative basis particularly compared to the Euro.
It does look like it has a sense of political stability it may not look great here at home.
But on a global basis it it certainly has a sense of stability behind it.
I compared to other currencies like the Chinese currency when it's freely convertible -- has deep and liquid capital markets so.
A lot of the characteristic she'd wanted to world reserve currency still reside more -- dollar.
Than they do with any other.
And we're looking at the US dollar index is prevent -- little bit of a choppy climb but nonetheless a very obvious climb over the past year.
And and I don't I mean we sit here and watch every single day that when there is some -- some -- worrisome.
Headline out of another country.
People either report to US treasuries or the US dollar will that pattern continue do think for the foreseeable future.
I think it probably well and hello it's does that mean that people should then take up sort of a -- bet on the dollar.
Well certainly I think that you know the dollar -- has had some upside -- particularly constructive on the dollar product on a longer term basis look in the short run.
We don't particularly wanna be long dollars as we do think there's an increasing potential -- the Fed does more quantitative easing so called QE3.
Hi there at the meeting announcement on August wander in September.
And that environments probably not particularly good for the dollar.
Not necessarily run to the Euro in that case but but certainly in that environment we don't think the dollar has a tremendous amount of upside.
If the dollar weakens on -- QE3 announcement during the third quarter.
Then we think that will be a terrific opportunity to put on long dollar positions and we think the improvement in natural gas its impact on the economy its impact on the trade balance.
All those things bode very well for the dollar -- medium term basis.
-- we have a lot of lot of hurdles between now the end of the year between the fiscal cliff the election and fed easing.
All right could -- Bob -- obvious global head of FX strategy thank you so much.
-- enough time to get to it the bubbles the likes the Aussie dollar at the New Zealand dollar and the Canadian dollar.
As perhaps currencies to keep and -- we'll put those up on our FaceBook dot com com slash after.
