Dollar Crash

Don't Like a Weak Dollar? Might as Well Get Used to It
By: Jeff Cox
CNBC.com Staff Writer


Weakness in the US dollar, which is causing everything to go up—including gas prices, food and stocks—is unlikely to go away soon as a selling frenzy hits the currency market. The greenback is approaching pre-financial crisis lows and threatening to smash through its all-time low when measured against the world's predominant national currencies.
A combination of factors accounts for the weakness, with the Federal Reserve's easy-money policies, huge national debts and deficits and the consequential possibility of a debt downgrade because of the financial mess in Washington leading the way.

In short, as trader Dennis Gartman noted Thursday, "the rout of the US dollar" is in full effect. "Panic dollar selling is setting in," Gartman, a hedge fund manager and author of "The Gartman Letter," wrote in his daily commentary. "This may carry farther than any of us dream of or, worse, have nightmares of."

Rick Bensignor, chief market strategist at Dahlman Rose in New York, said the dollar index, which measures the greenback against a basket of select other global currencies, has scant technical support "that has any meaning" between its present level and the historical low of 70.70. Some economists believe that a weak dollar is contributing heavily to the surge in prices at the pump, with one speculating that gas could reach $6 a gallon or beyond by summertime, given certain conditions.

Food prices also are on a steady climb higher. In both cases, a weak dollar is at least somewhat to blame as it drives commodities, which are priced in dollars and therefore cheaper and more attractive to speculators in the global marketplace.

http://www.cnbc.com/id/42703813