Analyst Debate: To Buy Or Not To Buy U.S. Dollars


The Euro  is making gains against the U.S. dollar – following The European Central Bank's decision to lift its key interest rate a quarter point to 3.5%.

The currency markets are now bracing for Friday's key November jobs report.

So--the question remains: When will the greenback bottom out? On today’s “Morning Call” the issue was debated by two currency watchers: Chris Mayer--Editor of Capital and Crisis--and Marc Chandler--Global Head of Currency Strategy at Brown Brothers Harriman.

Dollar's Bottom

Chandler says buy back your dollars by New Years. He says what typically has happened over the last several years- is that the U.S. dollar sells off going into the end of the year. He says it will then bounce back – recouping something like 70% of what it lost. So he says we’re getting a nice run-off in the dollar now – it began around Thanksgiving.

Chris Mayer disagreed. He said the surest bet in all of finance is to bet against the dollar--long-term. He says the dollar has done nothing but lose value since the Federal Reserve Board was created (that was in 1913). And he says he doesn't suspect that long term trend to change. Mayer says he doesn't see any reason for the dollar to hold value over the long-haul-as there is no gold attached to it.

Marc Chandler replied that Mayer is right--the dollar has lost value since the Fed was created. But Chandler said--that period is beyond the investment time frame of most of us.