A gorgeous chart — both in terms of its graphic qualities, and regarding the information it imbues — is on the front of the Business section of today’s NYT: Dollar Weakens Again (No U.S. Tears Are Shed)
The chart suggests to me that the dollar weakness has further to go — there’s some support at the $1.01 – 1.03 level, than again in the low $0.90s.
Here’s what the Times had to say:
Part of the confusion comes from the politics and economics surrounding the policies here and abroad on the dollar. The Bush administration has been pressing China and Japan since the beginning of September to let their currencies rise and the dollar fall because many of the industries hurt by a stronger dollar have lost thousands of jobs and are in states that could be critical in next year’s presidential election.
In addition, Europeans do not want the euro to gain too much against the dollar or the yen because that would hurt their exports and the rebound of their economies, which are weaker than the United States’ economy.
At the same time, economists generally agree that a weaker dollar is a good policy as long as it does not get out of hand. The dollar has to fall, they say, if the United States is going to be able to stop the growth of its record current account deficit, which is now $500 billion. If the growth is not curtailed, the dollar could fall even faster while interest rates rise, slowing the economic recovery.
Strictly based on the chart, this issue is likely to be with us for some time.