5 Unusual Things That Adversely Affect the U.S. Dollar

There are many factors that can cause a quick fall for the U.S. dollar, such as budget deficit or gas prices. However, those are commonly discussed in financial circles. What are really interesting are the more unusual things that cause a dip in the currency’s worth. Here are the most unexpected factors that adversely affect the dollar:

1. Weather – Strangely enough, something like as banal as an unusually hot summer or cold winter can have an effect on the dollar. As energy costs increase in every household, industries are also strained in their spending. Likewise, any sort of natural disaster (hurricanes, blizzards, flooding, etc.) can do the same thing to the community. As a result, the weather can adversely affect the currency.
2. Foreign Goods – Many Americans commonly purchase foreign cars or household products. Indeed, almost everything sold in a neighborhood Wal-Mart was made in China. Although many people flippantly use the term “trade deficit,” they rarely analyze the causes of such a deficit and buying foreign goods is certainly one of them.
3. Slow Spending – Americans can’t seem to get it just right, can they? When they are spending too much, it adversely affects the U.S. dollar. When they are spending too little, well, the same thing happens. Slow sales around the mall during Christmas time, for example, can actually have a domino effect on the entire economy.
4. Predictions of Inflation – Sometimes, it doesn’t even take the actual event of inflation to cause strife in the economy. Merely a large news report of a possible inflation is enough to send traders into a panic, causing the dollar bill to suffer.
5. Social Security – As the Social Security system continues to falter, so does the world’s faith in the U.S. economy. Like news reports of a possible inflation, widespread documentation of the failing Social Security system can drive the dollar down. Alternatively, attempts to reform Social Security can restore that faith in the market, causing the dollar to rise again.

It is hard to believe that a hard rain in the South or poor sales at the local shopping mall can send the U.S. money management system into a tailspin. Think of it as a financial butterfly effect and you may never look at these things the same way again. The ongoing list of factors is enough to make a Forex trader paranoid about the littlest things, no?


Post a Comment