USD vs. DOW

On average it would seem a strong US dollar is good for our domestic markets; however, for the first half of 2008, it seemed like a weaker dollar posed a better outcome. With much of our local economy beginning its massive decent into the trash, global markets were yet to feel the heavy effects. A weak dollar lead much of US products to be desired to foreigners because of the cheapness.

You may have noticed that the our markets went from worse to worse starting around July to August, but why?

Simply put, the US dollar was getting stronger. No longer did international markets have a place to turn because our products just didn’t look as enticing as before. Just look at the charts below:

While there is really no right or wrong combination of strength of dollar or market, is there really one that is preferable or an entity more important than the other?

In a good market, the price of the dollar may not really matter. We have now entered more of a global market, so there are always more options for companies to expand their range. On the other hand, if your economy is weak, then a strong dollar does not help any. If you can’t manage to do anything within your own economy, then at least you need to look good for international plays.

If you don’t look good to your own economy and international markets, then we are left with the complete mess we are currently.