Weak Dollar and Ag: What It Means, Where Money Could Go

January 26, 2018 10:33 AM

Earlier this week at the World Economic Forum (WEF) in Davos, Switzerland, Treasury Secretary Steve Mnuchin said the short-term strength of the U.S. dollar “is not a concern of mine, and it’s not something I spend a lot of time thinking about.”

He commented saying a weak dollar would help trade.

“There are benefits of where the dollar is and there are costs of where the dollar is,” he said during a panel discussion after the dollar fell to a three-year low on Wednesday.

The strength of the U.S. dollar was brought into question at the Top Producer Seminar in Chicago this week. Chris Nararyanan, president and CEO of GA Capital, LLC., thinks the quantitative easing (QE) that mostly drove the dollar’s rally is now ending.

“We’re starting to raise rates—the market is just taking a breather,” he said on AgDay. “The same forces that drove the dollar higher is now driving the Euro higher.”

On U.S. Farm Report, Doug Werling, vice president of trading at Bower Trading, Inc., mentioned more money will come trickling into commodity markets because “they have value.”

“The equity market, you’re going to see a lot of that money start coming into commodities,” he said.

Narayanan is seeing some of that movement into commodities, but looking at the big picture, he says the stock market is about earnings and employment. With unemployment decreasing and earnings are rising, they are meeting or exceeding company expectations.

“It’s no more cost cutting or anything like that, so we’re seeing more and more consumers back into the market, buying goods and services, that helps drive the earnings provided that unemployment is low,” he said.

Mnuchin’s comments on the weak dollar didn’t seem to get any support from President Trump, how said the Treasury Secretary’s comments were taken “out of context” and that “ultimately, I want to see a strong dollar” during an interview with CNBC.

Hear Narayanan’s thoughts on what the Federal Reserve plans on doing with interest rates in 2018 on AgDay above.

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Spell Check

bad axe, MI
1/26/2018 11:32 AM

  The IMF and THE WORLD BANK really don't want anything to do with the US dollar that's why it's going down in value 70 trillion in debt and only 3.8 trillion in printed money out in circulation it has a long way devalue. Daddy Donald , Uncle Wilber and Cousin Steve are all going to save us just keep believing them the IMF and THE WORLD BANK certainly don't and for good reason 70 trillion and no plan except AMERICA FIRST, AMERICA FIRST . Just remember when Bush in 2007 said , were strong ,America strong , dollar strong, strongy strong, were all strong . Then a week later he came out and said we need 875 billion to bail the credit markets out in the US. Paulson his treasury secretary said if we don't do this the farmers won't get any money to plant. 70 trillion is a lot of money to pay back when most of the stuff it bought is wore out now.


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