From today’s WSJ, U.K. Pound Serves as Omen for Dollar, which covers many of the issues discussed here previously. Essentially, the British pound is getting pounded. In the meantime, the US Dollar is doing well because, among other reasons,
Unlike the pound, the dollar is being buttressed by its unique status as the world’s reserve currency and the vehicle for transactions in U.S. financial markets, including Treasury bonds. That means investors often seek out the dollar as fears rise, sometimes in spite of their concerns about the U.S. economy.
However, there is concern about how long that status will last.
While the dollar continues to benefit from its unique position in financial markets for now, it is far from clear that the resilience will last. “Right now the market is beating up on the pound, but at some point it will look for something else to pick on,” says Paul Mackel, a currency strategist at HSBC in London.
The fact that the Federal Reserve stands ready to use a host of unconventional measures to flood the economy with liquidity in an effort to stimulate growth “could hurt the dollar quite badly” later this year, he says.
Not to mention the planned fiscal stimulus which will only add to the Federal Reserve measures.
Trying to be helpful, the WSJ also provides Stocks for a Weak Dollar.