USD

Dollar soars after Greek talks fail

News that ongoing talks amongst politicians in Greece have failed to come up with a coalition government and that new elections will need to be called, has triggered renewed fears that a Greek exit from the eurozone might not be too far away. In response, risk assets are again on the defensive with both traders and investors seeking sanctuary in the US dollar. Overnight, the dollar index stopped just short of its highest level for the year, reaching 81.45. The euro was singled out for especially harsh treatment, falling to 1.27; EUR/GBP dropped to 0.7960, a 3½ year low. Read more

16/05/2012 @ 07:07 GMT

Another bad hair day

Yet another bad hair day for risk assets yesterday amidst continuing concerns over a myriad of issues, including the unstable political situation in Greece and ongoing question marks around whether it will remain in the eurozone, the dire state of Spanish banking and sovereign finances, and a sense that the losses registered by the CIO unit at JPMorgan could turn out to be much greater than already disclosed. Read more

15/05/2012 @ 07:12 GMT

Dollar benefits from global financial suffering

May has been very kind to the greenback, with a gain of nearly 2% in the dollar index. Indeed, given the rapid re-intensification of concerns regarding the eurozone and clear signs that China is experiencing a very bumpy landing, it could be argued that the dollar ought to be performing better than it has done. After all, Q1 growth in the eurozone (due to be released tomorrow) is expected to show a decline in comparison to the solid growth registered in the US in the quarter. For dollar bulls, they will be eyeing a sustained break of the mid-January high around 81.50. Read more

14/05/2012 @ 09:19 GMT

The dollar’s gentle descent

It has been exceedingly gradual, but the dollar has been drifting downwards over the past two weeks. Not that we are talking about a big move mind you – the dollar index is down by roughly 1.5% over that time. That said, some of the major dollar crosses are at levels not witnessed for some time – cable for instance reached a 7mth high at just under 1.63 overnight. Indeed, the pound has been something of a revelation so far this year, despite the fact that the economy is apparently back in recession. Clearly sterling is attracting flows from a number of different sources. Read more

30/04/2012 @ 11:11 GMT

The dollar’s downward drift

It has been exceedingly gradual, but the dollar has been drifting downwards over the past two weeks. Not that we are talking about a big move mind you – the dollar index is down by roughly 1.5% over that time. That said, some of the major dollar crosses are at levels not witnessed for a while. Cable, for instance, reached a 7mth high above 1.6250 earlier today. Indeed, the pound has been something of a revelation so far this year, despite the fact that the economy is apparently back in recession. Clearly sterling is attracting flows from a number of different sources. Read more

27/04/2012 @ 14:44 GMT

Reasons not to be cheerful

The provisional PMI data for the eurozone have provided sobering reading for the start of the week, adding to the opening downside pressure on stocks and giving the dollar a lift. There’s an interesting contrast in the readings between Germany and France. For the former, it’s the manufacturing sector that was notably weak in April, the series falling from 48.4 to 46.3. Export orders were particularly hit, with evidence of weaker demand from the peripheral eurozone nations. In contrast, services held above the 50.0 level for the seventh consecutive month. Read more

23/04/2012 @ 09:56 GMT

The dangers of liquidity addiction

On a day when the robustness of the US recovery stood in sharp contrast to the continuing difficulties being experienced in Europe, it was little wonder that the dollar consolidated the gains witnessed the previous day in response to the hawkish FOMC Minutes. From the respectable ADP jobs figures to the decent auto sales numbers and signs of a tightening rental market, the prognosis for the US economy does have a healthier glow. However, in Europe, ECB President Draghi spoke about downside risks to the economic outlook after a 0.3% decline in euro-area GDP in the final quarter of 2011. Read more

05/04/2012 @ 07:24 GMT

Oil prices now the strongest growth headwind

Last week’s warning from the International Energy Agency (IEA) that the surging cost of oil now represented a bigger risk for global growth than the European sovereign debt and banking crisis did not generate the publicity it deserved. Brent crude has jumped by 17% this year to USD 126 a barrel, essentially matching the high achieved a year ago; in mid-2008, Brent soared to a record high of USD 146.

27/03/12 @ 10:57 GMT by Michael Derks, Chief Strategist

Bernanke reaffirms ultra-loose policy stance

Yesterday’s remarks by Fed Chairman Bernanke have put paid to the recent hypothesis that the Fed might be reversing its commitment to an extended period of ultra-loose monetary policy any time soon. His suggestion that wages growth remains subdued because of the weak labour market scuppered speculation that the Fed might need to start raising rates as soon as 2014. Although Bernanke acknowledged the better news on both the labour and housing market fronts, he reaffirmed that the Fed would stay cautious. Read more

27/03/2012 @ 06:45 GMT

Dollar dominance

The US currency is only 0.5% below the opening level of the year, looking at the DXY dollar index and has been on a rising trend for most of the week. Whilst there are concerns with the turn in peripheral bond markets and the softer tone to equities this week, the FX markets have been in a ‘risk-off’ mood for most of the month to date, with the Brazilian real 5% softer and the Aussie nearly 3% lower. Read more

23/03/2012 @ 08:06 GMT

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