US Dollar: Down Trend Resumed

Posted January 5, 2011

There are many factors that drive the financial markets and the performance of the US Dollar relative to other foreign currencies is an important one. Currently the short and medium-term price trend for the US Dollar is down once again. The reason a declining US Dollar trend can be very important for both consumers and investors is twofold: First, as the dollar’s price trend declines there is commensurate “erosion” in its purchasing power which increases our cost of living. Secondly, a declining US Dollar usually leads to an investment environment that rewards exposure to “falling dollar assets”.

According to Dorsey, Wright & Associates  there are certain assets and market sectors that historically tend to perform well when the US Dollar is declining.

It’s always a good idea to rebalance your portfolio periodically by selling your underperforming investments and re-investing back into the stronger areas of the markets. Now is a good time to make sure that you own some “falling dollar assets”.