Dollar Rising

The dollar has been on a recent rise against both the euro and the yen. Daniel Kruger's Bloomberg's article seems to take this as a good thing:

"The dollar advanced against the euro and yen for the third straight week as reports on retail sales and consume confidence suggest that the U.S. economy is more vibrant than analysts had forecast."

And indeed, a rising dollar has often been a good thing for the United States. During the last long-sustained period of US economic growth, the dollar was indeed very strong. However, there is a connection then that isn't being seen now. At that time the economy was growing and right now while the US economy is still growing, it's growing at a slower rate. And indeed the US economy is far softer than it appears. The housing market is already feeling slowing effects in most markets and is in retreat in others. The trade deficit is still far beyond historical trends--something that will only be exacerbated by a strong dollar. And the national debt is still growing.

And don't count on continued low crude prices to play a moderating role. I imagine they'll rise back above $60/barrel shortly after the November elections.

So, a rising dollar in this atmosphere? A suckers bet? A cash-out before a landing? It's rather strange, no?