Hello all…
These days with stock markets taking such hits, and the American market leading the way, I’m having a hard time figuring out why the USD is up in regards to most major currencies? I thought that with the present financial gloom in the USA, the currency would be suffering internationally, but it seems to be the opposite?
The US Dollar is rising once again. As the realization kicks in that the U.S. will not be alone in its economic struggles, currency traders are making major bets that interest rates will fall outside of the U.S. across the board. The British Pound, the Euro and the Canadian Dollar have all been losers.
Great answer Carlc. It’s speculated that the Eurozone and the UK will be hit a harder recession in the US, so interest rate cuts most likely will come from around the globe to battle that.
US Dollar strength has also been a function of institutional de-leveraging to take risk off of their books and get more cash. Carry trades are being closed across the globe which means higher-yielding currencies are being sold off to buy back low-yielders like the US Dollar and Japanese Yen.
These moves are all sentiment driven as everyone is scared and moving back to safe haven assets like the US Dollar. No one knows when this will end, but just be cautious in using fundamentals and technicals to plan out your trades as fear continues to rule the markets.
[QUOTE=Pipcrawler;73458 Carry trades are being closed across the globe which means higher-yielding currencies are being sold off to buy back low-yielders like the US Dollar and Japanese Yen.
Ok, that seems to makes sense, but what do you mean by high-yield vs low-yield currencies? I assume that you are referring to the interest rate?
I actually read an interview with George Soros and he believes that people are buying up dollars as some sort of save haven ( believe it or not )
,but yes I suppose that would be contradicting to what one might assume…Have we reached the bottom though or you guys think from here on up ( as it has broke major support and been consolidating the past 2 days )