US Dollar Bottoming?

Is the recent upward movement in the dollar a signal that it has bottomed out, and will now move back to a higher level? Or is it just a bull trap for those who are long the dollar? Despite reports of cheaper prices for international travelers to the States due to the depreciated dollar, it would be wrong to safely conclude that U.S. goods are now so cheap at the existing exchange rate that the dollar must appreciate from its current level. Overall the price of American products is still too high to ease the massive trade imbalance between the U.S. and the rest of the world. The falling dollar over the past few years has made American products more competitive and has caused the real value of U.S. exports to rise sharply. Nevertheless, the 2007 trade deficit still remains at $700 billion or 5% of GDP. The other side of the... [read full story]