Where Should You Invest if US Dollar Weakens From Here?
2023.09.26 08:30
At the end of July, the financial market was shaken by a sense of uncertainty due to the expected debate in Jackson Hole. Investors are preparing for possible changes in monetary policy.
Jerome Powell, President of the Federal Reserve, underlined the emphasis on data that has always characterized the central bank.
On the other hand, Christine Lagarde, President of the European Central Bank, declared herself determined to ensure that all necessary measures are taken by the country to reduce the risk of inflation linked to investments.
These recent statements have led to the strong revaluation of the dollar in the past weeks.
However, the economic situation is still unclear: with the next data to be released in the coming weeks, things could change quickly.
Therefore, it is important to monitor the markets carefully to stay updated on all the news.
If we compare inflation data in the US and Europe, we can see that inflation in Europe is falling less than expected.
This information helps us to better understand the current economic situation and possibly take appropriate measures.
Therefore, in the short term, the ECB will be more aggressive than the American central bank and this is likely to have a negative impact on Europe.
The has been falling in recent weeks due to the European Central Bank’s threat to raise rates.
This change has led many to worry about a possible effect on the economy.
Our readers know that, at this time, Core inflation is more reliable as an indicator of overall inflation, due to swings in energy prices.
Distorted data led us to trust the Core data even more.
This Macro indicator provides a measure of how the price of goods and services, excluding food and energy items, has changed over time.
Outside of the volatile components, inflation in the United States fell from 4.7 to 4.3%, while in Europe it fell less than expected and stood at 5.3%.
If we exclude energy, driven by the increase in oil prices due to the output reduction strategy desired by OPEC with Russia and Saudi Arabia as protagonists, we can say that in America inflation is decreasing, while in the Eurozone it remains stable.
With inflation decreasing in the United States, I expect the Federal Reserve to be quite flexible in the coming quarters, leading to a stabilization of interest rates with possible reductions by 2024.
With a weak , there are many sectors to invest in.
The EUR/USD is to be avoided until inflation is below 5% in Europe.
For this reason, I decided to focus on and , two instruments that will benefit from a weak dollar.
The upcoming Bitcoin halving in 2024, as well as the possible introduction of a Spot ETF, make this a good opportunity to accumulate BTC.
The Nasdaq also has advantages; being mainly made up of companies that rely on high levels of financing, it is very sensitive to drops in interest rates.
