This past week saw the dollar cap off a year long drop that represented its worst performance in nearly 15 years. Thursday the last full trading day of 2017 saw the dollar decline across the board. Analysts have called this “dollar negative portfolio rebalancing”, but there is something more at work here.
The year saw the euro gain 13 percent against the dollar. The greenback had made a 14 year high back on January 3, 2017 when it reached 1.0341. From here it was practically all downhill as the dollar took major hits against the single European currency and all of its other major rivals.
By the end of the day Thursday, the Bloomberg dollar index had logged its first annual loss since the year 2012. It had declined 8.2 percent against this basket of its rivals. In September, it had been down even more at over 10 percent.
Before the close on Thursday, the dollar had dropped to a EUR/USD level of 1.1959. This chart shows what a dramatic turnaround the dollar experienced from the first trading days of 2017:
The dollar’s loss was the euro’s gain. Not only did the euro clobber the dollar, it also made impressive gains against all of its G-10 rivals. The euro realized gains for the year that were its greatest since going back to year 2003. Though all of the G-10 currencies gained on the dollar, the euro was hands down the biggest winner against the greenback.
The trend has only continued into the New Year 2018 so far too. Per the Wall Street Journal reporting, the U.S. dollar reached its lowest point in over three months on Tuesday, January 2. The ostensible reason is that doubts have emerged on the ability of the Fed to continue increasing interest rates as inflation remains low in the United States.
The Commonwealth Foreign Exchange Chief Market Analyst Omer Esiner wrote more about this concern in a note this past week with:
“U.S. Consumer prices have stayed stubbornly weak despite other signs of economic revival, leaving investors wondering if the Fed can raise rates another three times this year.”
At the same time, the euro zone has experienced a growing economic recovery. Analysts and investors now see the European Central Bank moving towards reversing its enormous program of buying bonds that they have pursed over the last few years. This helped the Euro to touch 1.2061 on Tuesday, January 2, its greatest amount against the dollar for three years.
Is Your Retirement Portfolio Protected from the Declining U.S. Dollar?
While there may be some short term causes and effects contributing to the dollar’s sharp decline this past year, there are other factors at work. An increasing number of countries are switching away from using the dollar in international trade and for oil settlement. This includes Russia, China, Iran, Venezuela, and others. It makes sense that the euro (as the only viable alternative reserve currency to the dollar) would be realizing most of the upside gains. The problem is that most of your retirement assets are denominated in these declining greenbacks.
You do not have to let your portfolio be held hostage by the dollar. Gold represents the best time-tested hedge against currency decline and asset devaluation. It can be exchanged for dollars or any other currency when and as needed. Click here now to be able to obtain your no-obligation and no cost gold IRA rollover kit from best rated American and Canadian gold company Regal Assets. This way you can make sure that you acquire the information you terribly need in order to safeguard your personal IRA accounts using a partial diversification of your retirement assets and funds into truly tangible and physical gold.