Selling US dollars was one of the best trades of 2007. Since the beginning of 2008, the dollar has fallen against EUR, British Pound and other currencies.
Interest rates are the primary driver of currency market fluctuations and that will remain the case in 2008. The recovery of the US economy and the US dollar in the second half of the year will be contingent upon further easing by the Federal Reserve and easing by the European Central Bank.
The question now is will the turn in the dollar last or will the weakness resume in the coming year?
