EURUSD nosediving

You gotta love it

[johnnie]

Wow! The euro is now trading close to $1.35, which is lower than it has been for quite some time. Since many europeans have seen their adsense-bourne profits evaporate due to the strong euro vs the low dollar, this should be great news for all euro-publishers :) Just wanted to share this piece of good news.

[panos]

Good news indeed. I hope this trend continues.

[frakilk]

I like this trend but can anyone with financial savvy explain to me why the dollar is strengthening right now? It seems like it should be the other way around.

[johnnie]

The dollar is not strengthening. In fact, the dollar is falling against the Japanese Yen. However, the euro is weakening rapidly due to rising concerns of an imminent recession in the eurozone. This is a good thing and should be seen as a correction, since the euro has been way overvalued anyways. It will help in balancing US<->EUR trade a bit. To those using adsense in Europe, its a godsend.

Have you looked at the European markets recently? As of last week, the financial crisis has officially infected Europe. European governments have had to rescue banks in Germany, the UK, France, Belgium and the Netherlands. And more mayhem is underway. The Amsterdam stock exchange took the lead today, plummetting 9.14%. The French CAC-50 wasn't far behind with -9%. The German DAX closed at -7%. Europe is in the same boat as the US.

[edited by: johnnie at 5:26 pm (utc) on Oct. 6, 2008]

[panos]

It appears that the credit crisis has reached Europe and europeans realize that they are not immune from the financial malaise.

[johnnie]

I guess the US and Europe should have considered a simultaneous North Atlantic instead. The positive effect of the US bailout has been largely negated by Europe's problems.

[johnnie]

I mean a North Atlantic bailout

[denisl]

I wouldn't get too excited about the exchange rate. It is quite possible that if you are publishing in the Eurozone, your advertisers are there also. Those advertisers are likely to pay less in dollars for their adverts as the Euro weakens - so it could all even out.

[g1smd]

The UK bank bailout started many weeks ago. There was one bailout a year ago.

Ireland has also had problems for months. The whole lot has gone bad.

[edited by: engine at 4:33 pm (utc) on Oct. 8, 2008]

[johnnie]

denisl, bidding on adwords is done in euros ;) Euro publishers will just get a higher ranking compared to US publishers. So in cases where the euro advertiser catches up with the US publisher, you are going to see gains.

[johnnie]

By the way, expect this trend to only to be temporary. Since the US is going to pump $700 billion into the financial system, there is a good chance the dollar will go into free fall quite soon.

[Lovejoy]

Nobody knows where it all goes from here. The Fed has been propping up the market for over four years with low interest rates and the PPT. This latest problem has left very few countries in good shape ( those that didn't go for "interest only, no money down, subprime mortgages")
The US dollar will likely loose its status as the world currency and the petro dollar. If that happens.....well I don't want to go there..

Lovejoy

[FattyB]

I reckon the dollar might slip short-term a bit but over the next year it should strengthen. UK will probably drop interest rates soon, which will lower the pound.

Plus Europe has big problems as well, UK's might even be worse than US when our celf-cert and buy-to-lets all finally bottom out. So I don't think the dollar will collapse...though who knows in these wild times.

[VedranKovac]

Currently money from all over the world is flowing into US treasury bonds right now. To buy you need to execute transaction in USD. So, massive amounts of money are currently being converted into dollars. It's a flight to relative safety as we know (more or less) that the US government will be solvent for a while and it seems that EU is just starting to face the problem.

[Lovejoy]

VedranKovac

The funny thing is the US government isn't solvent, it's just judged to be "too big to fail". Sort of like AIG used to be ;~))))

Lovejoy

[LifeinAsia]

Too big to fail? The government's been a failure for several administrations! :)

[darkmage]

Plus you have oil prices, scurrnecy speculators and most central banks cutting their interest rates. The reasons are interwoven and messy.

Have a look at the Australian dollar.
A little over 3 months ago, it was at 0.95, now its at 0.71.
So if you get $US1000 from Adsense a month, this was $1052 3 months ago and it's now $1408.
In other words, its about a 30% pay rise.

[surfer67]

Have a look at the Australian dollar.

Australian is .66 now. All currencies are tanking. Euro, Australian, Canadian...

Canadian was $1.10 U.S and now it's 88 cents.

[Leosghost]

gold closed over $908.00 today :)

some of us called it here [webmasterworld.com] in 2006
actually we used to foretell what was then the future [webmasterworld.com] pretty well down in foo ..things change ..

edited for a little reminiscence;-)

[edited by: Leosghost at 12:20 am (utc) on Oct. 9, 2008]

[minnapple]

It has been said . . . .
When the United States gets a cold, the world gets pneumonia.
I would say we have much more than a cold here in USA and it is a concern.

[bts111]

I am making an extra 35% and I like it a lot :)

[frakilk]

After digging into this a bit deeper it seems probable that the US is going to print a ton of money to buy up all of the bad debts. Thus the dollar is going to be devalued a lot. I'm becoming more than a little afraid for AdSense income now.

[surfer67]

When the United States gets a cold, the world gets pneumonia.

That's true. International Adsense publishers can expect a large pay raise for 2009.

[climbingrose]

I might be wrong but the relative strength of US/Euro won't give European publishers much advantage if their main audiences are from Europe. Consider this:

You get paid in US Dollars which then will be converted into Euro. If US/Euro gets higher, you get more income. On the other hand, advertisers in Euro will pay Google in Euro, which converted into US Dollars. Now Google will get less than they normally get. As a result, the payout to publishers will be less than usual.

[workingNOMAD]

But if you are based in Europe with a US targeted website you will be laughing all the way to the adbank...

[VedranKovac]

And if you are based in the US with majority of visitors in Europe you will be crying all the way to the bank...

[panos]

C'est la vie :)

[biscuit]

Perhaps to even out the FX issue, Google could pay us all by sending out little ingots of gold through the post?

[HuskyPup]

Google could pay us all by sending out little ingots of gold through the post?

Nope, only "London Good Delivery Bars" accepted:-) They can afford it!

[johnnie]

Maybe gold-pressed latinum?