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Use the asset market approach to analyse the recent appreciation of the US Dollar. What is...

Use the asset market approach to analyse the recent appreciation of the US Dollar. What is your forecast of the future value of the USDollar?

I am doing a presentation on this question so i am after some good talking points. Thanks!

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Answer #1

The US D ollar has recently depreciated after much appreciation in H1 2019. This is more or less attributed to an expansionary monetary policy by Us Fed causing interest rates to revert back to cutting regime. As results investors now park money outside USA where interest rates are comparatively higher. This causes lower demand for follar buying anf hence it depreciates.

The future also looks grim as global uncertainty like US china Trade war and Oil Supply glut as well as inverted uield curves can create recessionary economy which propells US Fed to cut interest rates further to boost economic growth. However its negative implications being US dollar depreciates as its demand decreases due to sudden liquidity in market for Us Dollar due to easing by US Fed.

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