5 Commonly Overlooked Ways the US Dollar is Affected

We’re a nation at war that is experiencing a sub-prime mortgage crisis, so it isn’t hard to see why the US dollar has tanked and a recession is around the corner. However, it isn’t just a growing deficit and countless home foreclosures that are affecting the dollar.

Below are five ways the currency is being affected that people rarely discuss. Awareness of these undercurrents could give you the upper hand when analyzing the market, as most people are obsessed with the usual scapegoats.

1. Petrodollars – The US dollars earned by a country when petroleum is sold, also known as petrodollars, can strengthen or weaken the currency. Since most of the world’s petroleum is dependant on dollars, each country will retain a reserve of the U.S. currency. However, when a country finds itself with a large surplus of dollars, those dollars are put back into the U.S. by investing in assets. What will become of the dollar if petroleum is largely dealt in with other nations’ currency? It could definitely happen and, obviously, that would also make a large impact.
2. Weather – Every natural disaster to strike the US can affect the dollar. Obviously, damage from a few tornados has a smaller effect than Hurricane Katrina did. However, anything that has a negative effect on a large area will impact the economy, particularly if it causes problems for the agricultural industry.
3. Wal-Mart – Is the destroyer of Mom and Pop stores everywhere a culprit? You betcha’. In fact, any stores that largely deal in foreign goods is adversely impacting the dollar. So, you can also blame yourself for the imported car in the driveway and all those toys in your kid’s toy box.
4. US Treasury Secretary – No, it isn’t just the wacky antics of George W. that affects the dollar. In fact, the federal official that affects the Forex market the most is the US Treasury Secretary. It is this person, after all, who represents the US in terms of currency.
5. Public Perception – It doesn’t matter if the public’s perception of the economy represents reality. If they are largely pessimistic or optimistic, then Forex traders are obviously going to follow suit and move money into or away from the dollar.

Mainstream news agencies don’t usually relate the above factors to Forex, so they may not be on the forefront of our thoughts. There are obviously countless undercurrents that change the market, but one needs to analyze more than the usual culprits when trying to predict the ebb and flow.

Heather Johnson is a freelance business, finance and economics writer, as well as a regular contributor at Business Credit Cards, a site for best business credit cards and best business credit cards offers. Heather welcomes comments and freelancing job inquiries at her email address heatherjohnson2323@gmail.com