BBC News: Dollar hits new low against euro

What did people expect to happen? The ever growing American trade deficit, the costs of the War on Terror and simply bad fiscal policy will weaken the Dollar more and more:

The dollar has been weakening for some time.

The fundamental problem is the growing US trade deficit, now more than $700bn, as the US economy has imported far more goods than it has exported.

This has long been seen as unsustainable, and in the long-run some kind of currency adjustment has been seen as both inevitable and desirable.

But the recent change in policy by the US central bank has accelerated the decline, because people who put their money in dollars no longer get such a high rate of return.

So it will be only a matter of time until some oil nation will trade only in Euros instead of Dollars. China won’t be so stupid and ruin it’s big market and put pressure on the Dollar as well, but I am sure they will diversify their cash reserves as well.

If there is going to be another recession of black Monday or something the reason will be most likely bad American monetary policy.