NEW YORK (Reuters) - Extra, extra, read all about it. By slapping a story about the weak U.S. dollar on its cover, one of the world’s most popular business magazines may have actually signaled the end of the greenback’s current decline.
“The panic about the dollar,” reads the headline on the cover of The Economist magazine’s December 1 issue. Below it is a picture of George Washington, the face on the $1 bill, piloting an airplane going down in flames.
The cover is not the weekly magazine’s first about the falling dollar, but Macro Man, a blog writer who mixes humor with serious commentary on financial markets and economics, noted that in the last few years, each doomsday dollar cover has preceded periods of dollar strength.
“The dollar on the cover of The Economist traditionally spells the end, if only temporarily, of rallies in euro/dollar,” Macro said in an entry on Friday.
The blogger cited three other examples of the Economist curse for the dollar’s naysayers. One of the most prominent examples was the December 4, 2004 issue that featured a cover saying “The disappearing dollar.”
In the six months ensuing, the dollar rose 14 percent against the euro.
To be fair, Newsweek, a weekly magazine with a large distribution, also featured a weak dollar cover story around that time as well.
The same kind of phenomenon might be happening this week.
The euro has been soaring so far this year, rising more than 10 percent against the dollar to record highs above $1.49.
Yet George Washington struck again this week. The euro has slumped 1.2 percent against the rebounding dollar, the biggest weekly decline since mid-August, to $1.46.
“At some point, you knew the dollar was going to come off its lows and we’d all say why didn’t we buy it when Gisele and Jay-Z were making euro bullish comments,” said Lawrence Ellenberg, a currency trader with Brown Brothers Harriman.
Rumors spread several weeks ago that supermodel Gisele Bundchen demanded to be paid in euros, and American rap star Jay-Z flashed a suitcase full of 500 euro notes in his latest music video.