A strong $ for 2012

[marketeye]

Currency traders and some grain analysts see the U.S. Dollar staying strong in 2012. What is your opinion of the U.S. Dollar and its impact on corn, soybeans, and wheat prices going forward?

Here's the full story

Mike

[roarintiger1]

Can't argue that the stronger dollar might effect exports some.  But if someone really needs the grain, they will still be buying it.

[GoredHusker]

I don't see it.  Helicopter Ben has his finger just above the button to fire up the printing press and implement QE3.  The biggest impact a strong dollar has on commodities isn't exports of grain.  Rather, a strong dollar will pressure crude oil.  Falling crude prices mean falling corn and soybean prices as biofuels will fall accordingly.  Considering ethanol uses a lot more corn than exports, this is where we could get hit the hardest.  However, I just don't see a strong dollar.  I highly doubt Helicopter Ben allows the dollar index to creep much above 82.

[hardnox604008]

As far as the DX goes, the euro is about half the index. As europe heads into an austerity induced recession it badly needs to jumpstart exports with a weaker euro. Growth fundamantals seem to support the possiblity of getting it done..

British Pound is getting some support from not being the euro but the UK economy is in terrible shape. Can't see much to be bullish about there.

Japanese Yen, what can you say?  By far the biggest fiscal basket case of all.  China likes the knock off effect of shifting dollar reserves to the yen because it keeps Japanese exports in an uncompetitive position. But someday, and somehow, short yen/dollar is going to be a fabulous trade.

Commodity currencies- cando, aussie, kiwi- should perform relatively better than the others unless you get in a real broad market washout that makes the traders who are funding positions off of the carry trades there have to dump positions. Then they go down sharply.

QE3?  We'll see.  Fed is going to have to come around from the view that they are promoting that the economy is slowly improving. Not sure how many months of weaker data and market deterioration it would take to get them there.

[jrsiajdranch]

Heres an interesting story.

Japan and India eye new currency swap agreement

The Indian rupee has fallen against the US dollar hitting record lows in recent weeks

Continue reading the main storyRelated Stories

• China and Japan in currency deal
• Bank sells dollars to boost rupee

Japan and India are set to unveil a new currency swap agreement aimed at easing potential short-term liquidity problems.

The pact will allow them to swap their currencies for US dollars and tap into each other's foreign exchange reserves.

The move comes amid increased volatility in both the Japanese yen and the Indian rupee.

Japan's finance minister Jun Azumi was quoted by Reuters news agency, saying negotiations were in the final stages.

The deal is expected to be signed during Japanese prime minister Yoshihiko Noda's visit to India this week.

Analysts said the deal will help both nations stabilise their currencies, especially in the current uncertain global economic environment.

"Emerging economies overall are being shaken by the eurozone sovereign debt crisis," said Tsuyoshi Ueno, a senior economist at NLI Research Institute.

"Currencies in emerging economies get volatile when European banks pull out capital," he added.

"A dollar swap arrangement can help emerging economies as it promises a supply of dollars in an emergency."

The previous currency swap deal between the two nations, signed in 2008, has expired.

More on This Story

Related Stories

• China and Japan in currency deal 25 DECEMBER 2011, BUSINESS
• Bank sells dollars to boost rupee 15 DECEMBER 2011, INDIA

The thing is guys with a dollar based on an index the story isn't that the dollar is doing well it is that is it is doing well against other curencies. OF course that only lasts till we aren't.

I think that we will be higher till June. Maybe we get to 86 but 84 85 is more likely.

Good article Mike.

[deanes]

What is really concerning is the fact that the dollar is one of the strongest currencies!  If our bankrupt economy is one of the strongest,, the rest of the world is in real trouble.

Long term, I think it really bodes well for any country that has a capacity to produce the commodities that the world demands.

[jgefner]

One must remember that Food Security and commodity prices are hidden stimuli that causes dollar increase.

[jrsiajdranch]

jgefner Welcome!

That being said I think the weakening dollar spurs an increase in the cost of food given no Supply worries. And contrary to my cash crop friends on here I do not believe we have or are having a supply issue we got plenty of corn!

SO the reason for the increase in the price I pay for feed stuffs has everything to do with the currency manipulation by the FED and our GOV.

SO I would whole heartedly disagree with your assertion.

Don't mean to start a discussion and then run But I will be away from the computer for the rest of the day.

[Mizzou_Tiger]

Jr I would like to say I don't think we have a supply problem with milk......yet the cost of dairy in general at the grocer is probably up 10 to 20 percent the last few years......

What's your argument there.......if its your feed cost went up......then I would argue your product price went up too thus why are you complaining.....

[jgefner]

Corn prices are strictly integrated with alcohol alternative fuels, for example flexi-automobiles.

Many Central Banks (Emerging Economies) have commodities as a Reserve offsets for currency fluctuation, so manipulation will take place augmented with Climate Changes.