“Since the U.S. dollar is seen as a safe haven, good news is actually bad news for the greenback. And there is good news coming out of China. China’s manufacturing expanded in July, with the CLSA China Purchasing Managers’ Index rising to a seasonally adjusted 52.8, the highest level in a year, from 51.8 in June. Chinese banks are throwing money at customers, and the government has pumped $585 billion into stimulus programs to stoke a recovery and make China the world’s fastest-growing major economy again,” The Market Oracle Reports.
“The good news isn’t limited to China. U.S. consumer spending rose 0.4 percent in June, spending on U.S. construction projects also rose in June, the ‘cash for clunkers’ program is boosting America’s auto industry, and Europe’s factory outlook is improving. With good economic news popping up, investors are dumping dollars and buying equities, especially overseas. The iShares FTSE/Xinhua China 25 ETF (FXI) is up 10.6 percent in the last two months, but the iShares MSCI Australia ETF (EWA) is doing even better with a 15.7 percent gain. The iShares MSCI Brazil ETF (EWZ) clocks in a gain of just under 10 percent. Meanwhile, the SPDR S&P 500 ETF (SPY) has managed a 6.5 percent gain,” The Market Oracle Reports.
The lesson here is obvious: Investor money is flowing into foreign stocks. This is putting pressure on the U.S. dollar even as longer-term forces threaten to crush it. For example …
- The U.S. government debt has soared to $11.7 TRILLION. That debt is increasing by $1 MILLION every SIX SECONDS.
- The national debt is now at 80 percent of gross domestic product. Soon, it will likely climb to 100 percent of GDP.
- If President Obama serves two full terms, the debt will probably hit $20 TRILLION under his tenure. America is on track to pile up $1 TRILLION a year in annual deficits for the next 10 years.
Take a look at the ETF’s UUP & UDN, which are bullish and bearish ETF’s that follow the US Dollar.
The investment (UUP) seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Long US Dollar Futures index. The index is comprised solely of long futures contracts. The futures contract is designed to replicate the performance of being long the US Dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.
The investment (UDN) seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Short US Dollar Futures index. The index is comprised solely of short futures contracts. The futures contract is designed to replicate the performance of being short the US Dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.
Full Story: HERE