What is the contemporary US Dollar?
This is not the world-famous “green buck”. This is not just the national currency of the world’s only (after the disintegration of the USSR) superpower. This is also the global reserve currency and one of the major Forex currency (every single currency pair – expect cross-pairs is a dollar pair like GBPUSD, USDJPY, EURUSD etc). This is the major currency in gold-and currency reserves of more than 190 countries around the globe. This is the base of the global financial and banking system.
What if the USA announces a default and the US Dollar crashes? Such a scenario may come true on October 17th if the US Congress fails to resolve the debt ceiling issue. Well, this would be a doomsday for the global economy and financial system. Almost all the banks around the globe would crash along with entire countries that would go bankrupt. The consequences would be devastating even for the UK and the EU, Hong Kong and Luxembourg. This would be the collapse of capitalism.
In order to calm down the panic worldwide, president Obama promised to back the stability of the US economy and the US Dollar.
Obama’s Promises
On September 30th, President Obama promised to support the US Dollar in the international currency market (Forex), thereby backing its image of the global reserve currency and avoiding a default on the gigantic US public debt. Obama underlined that the US Dollar is the reserve currency for the entire world, so there cannot be any jokes about it. He promised to hold talks with all the leading congressmen to reach a compromise on the debt ceiling issue on Monday, Tuesday and Wednesday.
At this point, the public sector is under the threat of getting short of financing since the budged for 2014 isn’t approved yet.
Investors, Experts and Social Network Users On Obama’s Promises
Investors and experts seem to remain indifferent to Obama’s promises. They didn’t believe the US President and the US Dollar went on declining. This is confirmed by the recent dynamics of the US Dollar index (.DXY). At this point, DXY is in the midst of a mid-term downtrend and is trading around 80.18. The chart below, courtesy of Masterforex-V Academy, reflects the current state of affairs in the market of DXY:
According to Eugene Olkhovsky, Masterforex-V Academy’s leading experts in financial markets from Canada, Forex analysts are sure that the USA will definitely avoid a default while there is nothing to improve the image of the US Dollar, especially after those endless debt ceiling disputes between Obama’s administration and his opponents in the Congress.
Without any doubt, there will be no US default since the authorities will ultimately raise the debt ceiling once again despite multiple disputes. Even though the image of the US Dollar keeps deteriorating, it simply has no alternative at this point and is unlikely to have it in the near future.
