The $ dropping vs the Euro & Pound isn’t a huge cause for concern. There is very little that we can’t produce here for cheaper at this point than Europe. That is good for US business. Consumers get far more products from Asia. The $ is down 5% from then Yen in the last 5 years and 6% vs the Yuan. The dollar is up 2% vs the Peso in that same time frame. The high euro is killing exports and growth there while causing a huge boom here.
And our 65,000 troops in Germany? Do you suppose we hire contractors there and pay them in Dollars or Euro?
It is good for *some* US businesses. It is not a universal good.
Any business that has to buy inputs that are imported from offshore is feeling the hit.
Too many people keep looking at how the $ is doing against the Euro, and for most intents and purposes, I agree, we don’t need to worry about that situation. The EU has their own central bank, and if they want the Euro to not be so strong against the USD, they can take care of it themselves. In this regard, I’m in the crowd that is holding up the smallest violin in the world when the ECB gets to complaining about the USD.
The issue is the Yuan-USD “soft peg” — it keeps China flooding our markets with their crap when, if the currencies were priced correctly relative to each other, it wouldn’t be such a foregone conclusion to move so much production over to China and just jack up the deficits (current and trade).
The other issue is the peg to the middle eastern currencies. If they pull that peg or sell oil in another currency (or a basket of currencies), we’re going to see a sharp spike in the price of oil.