According to a number of reports and commentary from financial analysts, the world is “drowning in U.S. dollars” after the Federal Reserve decided to pump billions of dollars into the hands of 14 central banks via liquidity swaps. Moreover, recent technical analysis shows the dollar’s trade-weighted index chart indicates the USD might be in for a gigantic slide in value in the near future.
As members of the U.S. Federal Reserve plan to convene this week, both gold and bitcoin (BTC) markets have started to climb in value ahead of the meeting. Bitcoin prices rose over 4% during the afternoon’s trading sessions and gold jumped 0.76% as well. The price of one ounce of fine gold is $1,956.24 at the time of publication.
Meanwhile, after a brief upswing in value, the U.S. dollar has started to show signs of weakness again after losing massive amounts of value this year. One financial commentator believes the “world is frozen in response to the deluge of U.S. dollars.”
According to an article written by the business analyst, Stephen Bartholomeusz, “the world has been drowning in U.S. dollars” via “liquidity swaps with 14 central banks.”
“The combination of the access to dollars, the extent of the monetary policy stimulus in the U.S. and the Fed’s recent decision to hold U.S. rates at their current negligible levels – negative in real terms – has seen the U.S. dollar depreciate about 9.3 percent against the basket of its major trading partners’ currencies since March 19,” Bartholomeusz wrote. “That’s its weakest level for more than two years.”
A weak dollar exports deflation elsewhere. It helps US exporters be more competitive (albeit while harming importers in an economy with a structural trade deficit) and therefore one that imports more than it exports) while damaging the exports and growth prospects of economies elsewhere.
In addition to Bartholomeusz’s ominous outlook, the U.S. dollar index (DXY) could see a…