American economic indicators continue to deteriorate.
The results of the US presidential election are coming out soon, and Obama may be more likely to be elected. However, whoever ends up in the White House will face a mess. After many poor economic indicators in the previous period, the automobile sales announced by the United States on Monday dropped sharply, setting a record of 65,438+02 months. GM said that if adjusted for population growth, the car sales in June of 5438+00 were the worst since World War II. In addition, other indicators released on Monday were also miserable. The Institute of Supply Management (ISM) announced that the manufacturing index of 5438+00 dropped to 38.9 in June, the lowest in 26 years, and analysts predicted that it would drop to 42. The decline of this data is consistent with the weak regional manufacturing report released earlier, which proves that the economy is definitely entering recession.
Two factors will strengthen the dollar.
Although the economic situation is very bad, if the Democratic Party wins, it may be more beneficial to the US dollar. Because the party has already controlled Congress, it is estimated that the US rescue plan will be easier to pass by then. In addition to the US presidential election, the two houses of the United States will also be re-elected. Polls show that the Democratic Party may also win completely in the elections of the two houses, that is, it will continue to maintain the majority of seats, and it is very likely to expand.
Even excluding election factors, poor economic indicators have limited pressure on the dollar, because the United States is the country that can benefit most from the chaos. The United States is in trouble. First, there may be more troubles in other regions. Second, the United States has the ability to make other countries pay the bill. Both of these can offset the unfavorable economic indicators.
On Monday, the US Treasury Department said it expected to sell a record $550 billion in the fourth quarter of this year and another $368 billion in the first quarter of next year to raise funds for a large-scale financial rescue plan. On average, some American primary bond dealers predict that the budget deficit of the United States will reach $988 billion in fiscal year 2009, and bonds of 1.4 trillion dollars will be issued throughout the year. Obviously, most of this money will be paid by "foreigners"
Finally, if the crisis deepens further, the dollar still has room for appreciation. This is because in this case, emerging markets are likely to have serious problems, and the International Monetary Fund may not be able to save them at that time. This will first put pressure on European currencies such as the euro, because Europe is the largest creditor in emerging markets. For example, Spain invests the most in South America due to its historical origins, while the United States does not invest much in emerging markets.