Dollar Slips

“The greenback approached a 13-year low against the Japanese currency as a Fed report showed New York state manufacturing contracted in December at the fastest pace on record. The dollar dropped versus the pound and the Danish krone on reduced demand for the greenback as a haven.”

That is an excerpt from a Bloomberg article detailing the current state of the dollar. Low interest rates make the dollar an unattractive investment for many reasons and like the zero percent treasuries, the demand for them is irrational and temporary while investors get back on their feet. For now the dollar is experiencing short-term strength due to the demand. Once better investments are found and better returns are realized elsewhere, capital will leave dollar-denominated for investment elsewhere.

Look for more news of this sort, as well as articles describing sales of treasuries in light of investments elsewhere. As the situation plays itself out in the U.S. economy and the effects of monetary expansion play out over the coming months we will begin to see inflation on a large scale.