why the Euro is heading to parity and beyond with the dollar

why the Euro is heading to parity and beyond with the dollar
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it’s been there before in its short history, also it hasn’t moved substantially in 5 years against the euro, I bought dollars at 1.35 on holiday in New York in 2004. Their is so much talk and angst about it.

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just thought i would upload images interesting

listening to the audio on trading currency it looks like the euro is doomed

So should we all lump our euro savings into another currency to make a killing?

Another attempt by US bankers to kill the euro perhaps.

I did it long ago but more to protect myself from Lenny than anything else. I would think any Euro problems are a bit down the line when the Spainish question plays out. If China causes a big bang, then lending restrictions could sink the pigs.

Are there any tax implications to currency trading?

also how do you go about getting money on deposit in dollars?

I’d assume there is capital gains - beats DIRT. I haven’t changed it back yet. I have an account with a stockbroker not affiliated with any of the Irish banks but I do about 10 transactions a year so there doesn’t seem to be a problem me holding cash in dollars. If you just dumped it in there and left it, I’m not sure would they leave you, also I do not get interest on the lodgement.

Strong euro was not helping us last year - weaker euro is one quick way of restoring competiveness

One way of driving up inflation too as our cost of oil imports goes through the roof. It’s going to be very difficult to steer a path to devalue the Euro and keep interest rates high enough to suppress an inflationary surge, without crushing the PIIGS. Someone is going to be unhappy this time next year, -German savers or starving Greeks. I reckon the German savers, but they’ll have the last laugh.

European competitiveness with the rest of the world is important, but for Ireland the problem is also our competitiveness within Europe.

It seems intuitive that we are facing into a period of high inflation as it is the only way of reducing debt

That would be suicidal for countries that have an ageing population - if they have any chance they would want to keep inflation to a minimum. Countries are already woried about the mushrooming pension bill as their population ages, could you imagine the combination of an ageing population and inflation-linked pensions payments!

Agree

When the next stage of crisis gets into gear, demand for the $ will go up because European banks will need $ to pay back $ denomiated debt they have…

when that finishes you do not want to hold $…

Interview with Dr. Michael Hudson – Part I: Trouble in Europe -> itulip.com/forums/showthread.php … post157736

Had a listen to this and can’t really disagree with it. What’s the best way to take a stake in the dollar?

I’m assuming going down to your local branch and buying it isn’t the most efficient way?

Try AvaFX.com. Theyre based in Ireland.
Dont bother with spread betting. Its a rip-off.

Open a broker account and buy a Dollar ETF. Do a bit of research into what transaction fees apply to the fund, depending on whether it is based on long term or short term bonds. A lot of funds lose money due to rollovers of the contracts they buy so even though the underlying asset may be performing in your favour, the ETF you bought may lose you money.
Do a search on it on google or yahoo finance. Have a look at UUP, EUO and DRR. Compare their performance with the actual dollar V euro (or basket of stocks depending on the ETF). Be careful with leveraged funds and ensure the product you go for suits your risk profile. Oh and yeah, be careful about taking financial advice from some bloke on a message board. :slight_smile:

Cheers i’ll look at those. Basically want something that’s cheaper than the ~5c double conversion charge the bank would charge for cash…

What do you mean by roll over of contracts? How much would that cost you as a percentage?

They short the euro by a number of different means, i.e. buy a series of different contracts with different risk factors and settlement dates which when all put together will rise in value if the Euro falls.
Three things can happen.
The € falls, the fund should go up.
The € rises, the fund should go down.
The € stays the same, then the price you pay for the ETF should be the same in a year when you sell the share in the ETF.

However the cost of the contracts is taken out of the value of the fund so in the case of scenario 3 even though the € stays the same, the fund is worth less with the same amount of shares in existence, therefore when you sell your share, you will get a lower price.
How much lower depends on the transaction costs, managment costs and the type of contracts they are involved in but in some ETFs this decay can be massive, >20%. I find the first stop is to go to Yahoo Finance and put in a fund and use the compare function on the graph to compare the value of the fund to the underlying currency.

To use a Pin analogy, there was once fantasy/fictional creature from middleearth who released a prospectus on a real estate company. The returns sounded good but reading the fine print on the directors renumeration would show you that the directors of the company would make a packet every year from your investment, to the detriment of your returns and if the fund made nothing, then the directors would still be handsomely rewarded for operating the fund as the value of your stake fell.

Just be careful with these things, an investment in the wrong funds might do nothing more than line a fund managers pocket with your cash.