The US Dollar to Philippine peso rate of exchange has been mostly good for American expats living in the Philippines during January and some of February.  It seems though, no matter how good it is, I hear mostly that it is terrible. 🙂 The good left town yesterday though. I wouldn’t worry too much.  It has a round trip ticket. The fall of the dollar is based mostly on promises from Greece. Yes, all together now, lets roll our eyes.  The Euro will get a bump out of that and then it will start its downward decline again. At least that is my belief.

The US Dollar to Philippine Peso Fell Yesterday

US Dollar to Philippine Peso

This chart shows the Philippine Peso to the USD. That is important to know as a higher value on the chart means a lower value of the dollar. The upper aprt of the graph shows the value of the Php to USD over the last month. The smaller graph at the bottom of the graphic shows it for the last year. The dollar has tone well in 2012. That  has reversed in recent days. I don’t believe the reversal will hold. This isn’t the first time Greece has made promises it can’t keep. It had to make them in order to get more money to keep it a float. The chart comes from XE.

If Greece holds true to form, the people will balk at Greece’s agreeing to the newest austerity attempts, riot in the streets and at the very least go on strike. The government wanting to hold onto power will cave.  We could end up with another prime minister in Greece that punts and resigns.

I think though the other nations are finally at the end of the rope with Greece. When they don’t follow through this time, there will be no next time.

We’ve had a new comer to the site that has been saying the Philippine peso mimics the Euro. I see what he means.  Also though, in part, when news is good out of the Euro Zone that improves the outlook for the world economy and sends people back into stocks and out of bonds. I also think it is based more on forex traders expectations than it does economic facts.

These bumps tend to be short termed. The best news out of Washington will send the dollar down for a week usually, maybe two. Then it starts to climb back up. I’m beginning to understand something. All those that teach forex say dedication and sticking to your plan is essential. That you must emotionally detach yourself from your money. Someone may not understand why good economic news send the dollar down. It is because people sell bonds and invest in the stock market which increases the supply of cash.

If you made a trade and then news comes out that affects how traders feel what will happen? For a short time it may cause the trade to go bad.  These effects are usually short lived. It could cause you to panic and sell at a loss. If you’re original plan was good though and you stick to it, the blimp will end and you’ll see the investment return profits like you thought.

I am beginning to expect very positive things for the dollar. I’m beginning to wonder how it could do anything but go up. If the Euro Zone (EZ) continues to do poorly that will increase the fears of global recession. If the EZ cannot buy imports, then people will start loosing jobs in other nations. Stocks will fall and people will put money into US government security. That will reduce the supply of money and raise the cost to acquire them.

Poor performance in the EZ will  likely send US stocks down. Again, this will result in people buying bonds instead of stocks.  This will decrease the supply of money and should push the value of the dollar up.

If the Euro rises, which is unlikely for the long term there will be a decrease in the value of the dollar in the short term. However, this will increase the outlook on the US economy which already seems to be in a rebound. This will hurt the dollar for a time but should improve its value in the long run. If a countries economy looks better the currency will be stronger. That certainly makes sense to me but if I’m mistaken, tell me why in the comments.

There is something else to consider. That is where the dollar sits over time. One can get this number from the US Dollar Index or USDX. The dollar has been low and it still is low. It is not at its lowest point. That happened in 2008 when it hit 70.698.  The dollar reached its highest point on March 16th, 2008.  It wasn’t the blessing people thought it was. Not for those living in the USA. It was great for expats in most parts of the world. I do remember seeing the dollar begin to rise against the peso then. I came in February of 2008 and the dollar dipped below 40 for short time just after I got here but was up around P50 within a year.  That too was short lived and soon the dollar began its decline.

Most of the time, you don’t want to buy something when it is at its peak value. The chance of it going down is pretty good. I don’t use charts much but I do look hard at historical averages. And when the dollar is below 100 it is down. It is at around 8o now.

US Dollar Index

That’s the dollar index as of yesterday.  The exact rate doesn’t really matter. When looking at historical charts I can’t care about pips or the numbers far out to the right. What I see is the dollar is well below where it has been and near a low point. If it is at a high point, I have to start thinking bubble. How long I stay in depends on my risk adversion. The lower the risk, the less the profit. However the greater chance of a loss too. This chart comes from Bloomberg.

The Fed’s quantitative easing ended in July of 2011 and a couple of months later the dollar shot way up. Probably too much and some profits where taken. But the trend has been upwards since September of 2011. You go invest on trends alone though and I think you toss your money up to the wind. I don’t pretend to have all the answers but I’m getting more of them.

Gold hit its highest point ever a few months ago and then started falling.  Just as I warned it might. It hit its historical high. Though I gauged when the fall would happen I was a few months early. Why did I misjudge it? I didn’t understand market sentiment yet. The market sentiment probably pushed it up beyond where it should be. I think the light bulb went off as I was writing this.

I think one could make money off of market sentiment. One could become the shark feeding on the unaware. If one could predict market sentiment before it happened, one could make a killing. With stocks that is why insider trading is illegal. If you have information before the world does, then you can use that to affect the price of stock and to make a killing.  The forex market is too for investors to  effect the price with that kind of information if one had it. If you’re buying and selling, even if you are Bill Gates you can’t have that much of an impact. Only governments can pull that off and it will be apparent when they do it.  They will also announce it so everyone knows what caused it. That also affects market sentiment and probably increases their desired effect. I think the smart investor could use that public information to make some money or to hold onto his position and let the effect of the intervention take its course. Especially don’t take a loss during the market sentiment phase because it very likely will not last. It changes faster than the direction of the wind! Of course, there will be times when one still has to take that loss.

If the Fed does go into another extended QE process like the one they used in the past, then everything gets tossed out. I don’t think the Fed can. Not with the dollar at near record lows. The oil producing countries will be most unhappy as their revenues fall. Bernake did signal that he might use QE in a different way than just buying back bonds. That buying back of bonds floods the currency and thus increasing supply. I don’t understand it to be honest but this new method is said to increase the value of the dollar. Maybe a reader can explain it to me in the comments.

What Does This Mean For The US Dollar to Philippine Peso?

Things are looking good. Oh they don’t look good today but I’m no longer have the feeling of dread that I use to every time the value of the dollar fell. Short of more QE similar to what we had before,  I think the dollar has to rise. Even if they peso does rise also, at the very least our dollars should hold ground. Our spending power shouldn’t be reduced. The expat living in the Philippines can probably look forward to more spending power. The US economy has improved and beginning to look like that will hold. If it doesn’t, at the demise of the American people living in the USA it will help the expat. The future of the US dollar to Philippine peso is looking better to me than it ever has.

Filed under: Dollar To Philippine Peso

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