Crosscurrents

By Joseph Trevisani
02 June 2009 @ 01:10 pm EDT

The factors driving the Dollar seem to vary with the season. Last fall at the height of the financial crisis safe haven flows trumped all considerations; at one point investors accepted zero return for the security of holding US debt. The Dollar rose 17% against the Euro in a month and made similar gains versus the Pound Sterling, the Canadian Dollar, the Swiss Franc and the Australian and New Zealand Dollars. But even at maximum market panic Dollar superiority was not total; the imploding Yen carry trade drove the Dollar down against the Yen to 90 to the Dollar despite the huge inward flows to US securities.

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