Dollar Sharply Higher
December 17th, 2009WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
Via: Wall Street Journal:
The dollar is sharply higher against its rivals early Thursday in New York on lingering global credit concerns, poor economic data in the U.K. and continued support from the Federal Open Market Committee’s statement Wednesday.
Investors flocked to the safety of the dollar during Asian and European trading as they digested the Federal Reserve’s more upbeat message on the economy and its implication for monetary policy as well as Greece’s credit-rating downgrade. Appetite for risk was hurt further after U.K. retail sales declined in November, their first monthly drop in six months.
Global stocks tumbled, with futures on the Standard & Poor’s 500 index indicating U.S. equities are also set to open lower, while oil and gold are also down.
“It’s risk reduction profit-taking” across the board, said Neil Mellor, a currency strategist at BNY Mellon in London. “Investors are acknowledging the fact that it’s year-end and it’s time to take profits on the rally we’ve seen” in many riskier asset classes.
Many investors used cheap dollars to fund purchases in riskier assets throughout the year and are now unwinding these positions, boosting the dollar.
The euro sank as far as $1.4329 overnight, its lowest level since Sept. 8, while the dollar index, which tracks the currency against a basket of six others, surged to a more than three-month high.
“A combination of things are weighing on the euro, particularly the Greece story and the post-FOMC reaction,” said Geoffrey Yu, currency strategist at UBS AG in London.
Early Thursday in New York, the euro was at $1.4353 from $1.4531 late Wednesday, according to EBS via CQG. The dollar was at Y89.94 from Y89.78, while the euro was at Y129.08 from Y130.45. The pound was at $1.6118 from $1.6329. The dollar was at CHF1.0491 from CHF1.0387.
The Dollar Index was at 77.739 from 76.900.
ooh, ooh! sir! i know the answer!
it’s called “dollar-carry-trade unwinding, phase I”
no?
ok, then it’s called “lighting the fuse”
no?
ah, it’s “arming the warhead”?
ok, last try. it’s called “armageddon – x(days), where x=?(number of protesters arrested in Copenhagen)+(mean IQ of current members of the US Senate)
damn. say what? it’s called “Ben siphons treacle into airborne helicopter fuel tank at 7,000 feet”?
bastards. that was my next shot.
“Investors flocked to the safety of the dollar”
Tweet, tweet. How many times have we seen that phrase, now?
One day it will be “Investors flocked to the safety of the Swedish kroner”, and still none will be the wiser.