The US dollar keeps dropping in value, but other countries devalue their currencies as well to prop up the dollar. So they are enabling the status quo. With competitive devaluation, exports are cheaper. "Increased demand for products in other countries due to lower prices can also mean more jobs and lower unemployment rates at home."
First, the yuan. "Reuters suggested that both China and the United States were "winning" the currency war, holding down their currencies while pushing up the value of the Euro, the Yen, and the currencies of many emerging economies. Martin Wolf, an economics leader writer with the Financial Times, has suggested there may be advantages in western economies taking a more confrontational approach against China, which in recent years has been by far the biggest practitioner of competitive devaluation." The yuan seems to have an upper level of about 0.16 USD.
Next, the Swiss franc. The SNB has announced that they will not allow the franc to be worth more than 0.8333 euros. On about September 6, the franc dropped about 10% in reaction to the announcement. The franc is very close to that level since it is now trading at .8299.
Third the yen. The Japanese will not let the yen drop to less than 76 yen/dollar.
Fourth, Brazil has intervened in order to weaken the real. "Brazil is capitulating as well, stepping up its actions to weaken the value of the real and prop up the U.S. dollar.
Britain has engaged in quantitative easing to weaken the pound, buying up 200 billion pounds worth of gilts last summer.
Europe is launching a massive quantitative easing program with trillions of newly printed euros. They do it indirectly, by lending to banks which then buy up government debt, but the effect is the same.
Canada engages in quantitative easing as well. "Cue Mark Carney, head of Canada’s Central Bank, who has announced that Canada will “adopt a much milder version of the U.S. and U.K. strategy of printing more money to fight the recession."
The only major currencies that have not intervened to weaken their currencies, to my knowledge, are the Australian and New Zealand dollars, the Swedish krona and the Norwegian krone.
However the krona and krone both have liquidity problems. "Alistair Cotton of Currencies Direct says: “In theory a robust domestic economy translates into a strong currency, but safe haven status is as much about liquidity as it is about economics, and in that respect the krona and krone do not come close to the dollar, yen or Swiss franc.” In fact, he thinks “the relative safety of the krona and krone would almost certainly be eroded if they saw huge inflows, because the relatively small size of both markets means if everyone ran for the doors at the same time – as usually happens in currency markets – both currencies would see massive levels of volatility to the downside.” The liquidity problem also affects the New Zealand dollar, which is less frequently traded than the Swedish krona.
This leaves the Australian dollar as the only credible alternative to the US dollar.
Update: 2/14/2012. The Bank of Japan just did a surprise QE of 10 trillion yen. The USDJPY jumped almost instantly from about 77.6 to about 77.9 and now it is above 78.4. The AUDJPY likewise jumped from about 82.7 to about 83.7.