U.S. Dollar Trades Mixed Against Major Currencies

A day after Ben Bernanke helped bolster the strength of the U.S. dollar by not mentioning any more plans for quantitative easing, the greenback fell back to earth, trading mixed against other major currencies.

Most of the important economic news centered on unemployment, which in the United States remained level, dropping only slightly, while unemployment in the Euro zone climbed to its highest level since the introduction of the Euro as a currency in 1999.

Of the 17 countries using the Euro as currency, unemployment plunged to 10.7 percent for January, pushing it down against the dollar to $1.3316 in the latter part of the trading day.

The British pound climbed against the U.S. dollar from $1.5925 to $1.5953.

Other currencies strengthening against the dollar were the yen and the Canadian dollar. The dollar fell from 81.18 yen to 81.08, and from 98.89 Canadian cents to 98.57 Canadian cents.

Against the Swiss franc the U.S. dollar climbed from 0.9039 to 0.9059.

Euro Rises Against Greenback on Interest Rate Differentials

The dollar fell broadly Thursday as traders opted for the safety of the Swiss franc and Japan's yen amid ongoing turmoil in the Middle East and North Africa.

Meanwhile, expectations for widening interest-rate differentials pushed the euro to a three-week high against the dollar.

The dollar sank to a record low against the franc of CHF0.9234 as violence increased in Libya and fears increased that unrest in the Middle East could spread to more oil-producing nations like Iran and Saudi Arabia.

"We continue to focus on the issues in the Middle East," said Aroop Chatterjee, chief foreign exchange quantitative strategist at Barclays Capital in New York. "Even though we've seen a bit of stabilization in oil prices, in the currencies market, [investors] still favor safe havens."

The franc has become the most popular safe-haven option during times of geopolitical risk. It also rallied against the euro Thursday. The yen also was bid higher against the dollar and euro thanks to its perceived safety.

Oil prices climbed above $100 a barrel early in the global day on the New York Mercantile Exchange, leading to the dollar's record weakness against the franc. But even as oil prices have backed off that lofty level, currency investors continued to favor safety.

The situation in the Middle East appears to be far from stabilizing, so the flight to safety is likely to continue, analysts said.





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Yen Nears 3-Week High, Franc Climbs to Record on Libyan Unrest

The yen was about 0.4 percent from the strongest level in three weeks against the dollar and the Swiss franc climbed to a record as an uprising in Libya sent oil to a 29-month high, boosting demand for safer assets.

The yen and the franc headed for weekly gains against most of their major counterparts as stocks and commodities dropped worldwide. The dollar traded within 0.2 percent of a three-week low against the euro before a report forecast to show U.S. pending home sales declined in January.

“It’s a new scenario where the market is battling as global economic growth is being thwarted by higher oil prices, and that’s being reflected immediately in the U.S. dollar,” said Kurt Magnus, executive director of currency sales at Nomura Holdings Inc. in Sydney. “The Swiss franc and yen will continue to do well, they are incredibly safe-haven currencies.”

The yen was at 81.93 per dollar as of 8:10 a.m. in Tokyo from 81.89 in New York yesterday, when it touched 81.63, the strongest since Feb. 4. It has gained 1.5 percent this week against the dollar. The franc climbed to a record 92.28 centimes per dollar before trading at 92.55 from 92.64 yesterday.




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US Dollar Wavers on Surging Oil Prices, Weakens Against Swiss Franc

The dollar nursed heavy losses early in Asia on Friday, hovering above a record low versus the Swiss franc as investors sought safety in other currencies on fears the unrest in Libya will spread to other oil producers.

But a sharp retreat in oil prices from 2-1/2 year highs, sparked by an unsubstantiated rumour Mummar Gaddafi had been shot and Saudi Arabia's assurances it can counter Libyan supply disruption, could offer the dollar a brief respite.

"That safe-haven trade of going long Swiss may just turn around a little bit," a trader at a U.S. investment bank said.

Higher oil prices are seen as having a bigger impact on the U.S. economy given it's reliance on consumer spending to drive growth.

The dollar last traded at 0.9250 Swiss francs , having hit an all-time low of 0.9234 francs on trading platform EBS overnight. It has fallen nearly 4.8 percent against the franc in the last two weeks, its worst showing since June.




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US Dollar No Longer Safe Haven?

The US dollar has traditionally been a safe-haven asset, meaning whenever people are afraid, they sell ‘risky’ assets and flee to the safety of the US dollar. The same goes for US Treasuries.

Indeed, at the height of the global financial crisis (right after Lehman Brother’s bankruptcy in September 2008), both the US dollar and Treasuries surged. The Chicago Board Options Exchange Market Volatility Index (VIX) also spiked at that time. In uncertain times, the VIX is probably the purest measure of the market’s fear because it tracks expectations of volatility in US stocks.

Meanwhile, risky assets – those most susceptible to an economic downturn, like industrial commodities, junk bonds, small-cap stocks – plunged.

In the period after the zenith of this panic, the value of the US dollar, US Treasuries, and the VIX continued to strongly correlate with the resurgence of fear and uncertainty in the global financial markets.

However, starting the week of February 21, 2011, this pattern appears to have broken down.






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Dollar Index Slides to Lowest in 14 Months

The Dollar Index has fallen to its lowest level since August 2008, dropping to 75.767. The Dollar Index measures the U.S. dollar against the Canadian dollar, Swedish krona, Swiss franc, yen, pound and euro.

Low interest rates and U.S. dollar value have investors treating the greenback as a carry trade, and are selling of their dollars in order to get better returns on higher-yielding currencies.

While the U.S. asserts they want a strong dollar, their practices contradict that assertion, and foreign countries are concerned over their own manufacturing bases which are dependent on a stronger dollar to sell goods in the U.S. at a decent profit.

Of course U.S. manufacturers would like a weak dollar to continue, as that would help prop up the industry; strengthening it and eventually creating more jobs, while also shrinking trade deficits.

U.S. Dollar and Yen Remain Strong ... Investments of Choice for Those Seeking Safety

Safety was the driving force for investors today, as the announcement by U.S. Treasurey Secretary Henry Paulson that the Troubled Asset Relief Program (TARP) would add to its focus of infusing capital into banks, to also helping nonbank financial sector.

Jittery investors interpreted that as problems are emerging in the attempt to fix the financial crisis.

Immediately after Paulson's comments migrated across the news wires, traders ran to safety in the U.S. dollar and yen.

Even so, the dollar fell significantly against the yen, dropping to 94.61 yen from 97.60.

The British pound took a beating today, falling to its lowest levels since June 2002, dropping below $1.50. Against the euro it suffered its worst performance ever.

Much of that was generated from the comment by the Bank of England that the British economy was for all practicle purposes, probably already in a recession. British economists say there's no doubt there will be more substantial cuts in interest rates in the near future; most likely beginning in December.

The Bank of England confirmed this saying if interest rates stay at the current level of 3.0 percent, there's risk the country could enter into a deflationary period of time beginning in the latter part of 2009.

The European Central Bank has been pouring tons of dollars, Swiss francs and euros into banks in the eurozone in hopes it'll encourage them to lend to one another again. The ECB announced Wednesday it would offer $60.574 billion for a week at a fixed rate of 1.43 percent.

U.S. Dollar Slides as Investors Run to Safety

Against six major currencies measured by the dollar index, the U.S. dollar fell to 78.159, dropping from the 79.149 it stood on late Tuesday.

The British pound, as well as Swiss franc increased by 2 percent against the greenback, with sterling buying $1.8218, a significant increase over the late Tuesday price of $1.7800, while the dollar traded against the Swiss franc at 1.0993, down from 1.1035.

The euro was also up strongly, as it came in at $1.4325, in contrast to Tuesday's $1.4091.

Against the yen the dollar also fell, last standing at 104.55 yen, down from 105.33 later on Tuesday.

Besides the obvious flight from equities, gold futures also put the pressure on because they are denominated in U.S. dollars.

U.S. Dollar Makes Solid Gains against Major Currencies This Week

The U.S. dollar continued to strengthen, as it gained again against the euro, yen, Swiss franc and Australian dollar over the week.

With the problems in the credit market looking like the worst may have passed, and the job data from the US Labor Department far better than expected, with a loss of 20,000 jobs versus the expected 80,000, investors are gaining optimism about where things are heading.

Unemployment for March also fell, dropping from 5.1 percent to 5.0.

All of this may indicate that while the slowdown will continue, it's dropping in speed, and may be close to plateauing.

Another factor was the expected quarter-point rate cut by the Federal Reserve, which seems to confirm things are getting better, which will help the dollar strengthen.

One concern is whether this will have a negative impact on manufacturing jobs in the U.S, which while declining some, it's nowhere near what it would be if the dollar starts to significantly strengthen. The weaker dollar has kept exports high, and helped keep the industry from losing too many jobs.

US dollar Drops Again, Federal Reserve Decision Looming

The US dollar declined again against several major currencies, as most markets look toward the decision of the Federal Reserve later in the week, which most expect will cut the rate by a quarter point. Even so, the unsurety of what the Fed will do has investors holding back on the greenback until the decision is revealed.

Performing strongly against the dollar was the euro again, which climbed to $1.5645, an increase over the $1.5593 in New York on Friday. The British pound also did well, rising to $1.9900, up from $1.9818.

Also gaining was the Swiss franc, with the dollar buying 1.0353. That was down from what the dollar bought on Friday: 1.0367. The Candian looney also strengthened, ending at 1.0119, in contrast to 1.0164 the U.S. dollar bought on Friday as well.

Another factor in the ongoing weakening of the dollar is the high inflation in Europe, which pretty much guarantees rates won't be cut over there.

Most think there will be a cut on Wednesday by the Fed, and that they'll probably hold cuts for some time.

Dollar Rises Against Major Currencies Friday

Even though the American economy has shown sluggishness in relationship to consumer spending, the U.S. dollar still managed to climb against the major currencies on Friday.

The Department of Commerce report noted that consumer spending, while growing, was only at a 0.1 percent rate in February. Not including food and energy prices, inflation was fairly tame, also rising by only 0.1 percent in February.

The U.S. dollar gained against the Euro, Canadian dollar and the Swiss franc, among others. It remained the same with the Japanese yen.

U.S. Dollar in Largest Drop against Euro in Two Weeks

Commodity prices have surged again as the U.S. dollar fell the most against the euro in two weeks.

Much of the economic news coming on the same day was a major instigator of the drop in value of the dollar.

Home prices in the U.S. dropped by 16 of 20 regions in the U.S. that were measured, while consumer confidence the country dropped to it lowest in March in five years. Future expectations were at a stunning lowest in 34 years.

"Even though the numbers were so bad, what we are seeing is part of the equity/dollar risk appetite play all of which is suggesting a comfort to take on risk at the expense of the U.S. dollar," said Ashraf Laidi, chief FX strategist at CMC Markets in New York.
Still, according to Laidi, when you consider all the bad news coming, the increase of the euro against the dollar wasn't as significant as it outwardly looks.

At its peak today, the euro increased to $1.5618; up 1.2 percent for the day.

The dollar also fell against the yen, with last results as 100.20 yen, a drop of 0.5 percent. The Swiss franc also increased against the greenback, with the dollar falling 1 percent to 1.0079 francs.

Dollar Strengthens Against Euro, Yen for First Time in a Month

It's been a month since the U.S. dollar increased against the euro and yen for the week, as the Federal Reserve has battled to increase confidence in the economy and financial institutions in the country.

Along with cutting interest rates, the Fed also offered credit to securities firms, which was a first, as well as allowing a more extensive range of things they'll accept for collateral on loans.

Against the euro, the U.S. dollar increased to $1.5431, up from its March 14 price of $1.5674. It's been over a month since the dollar has reached that level. Against the yen, the dollar reached 99.58, a 1.5 percent increase from its March 14 finish also.

The dollar also gained against the pound, which fell to $1.9818; while it also increased against the Swiss franc, ending at 1.0093.

It also surged against the Norwegian kroner, buying 5.2616, and also with the Australian dollar, which plunged to a five-week low of 90.21 U.S. cents; falling by 3.8 percent.

For the week, the U.S. Dollar Index gained 1.5 percent to 72.71. On March 17 it had fallen to an all-time low of 70.698.

After the commodities fell this week, others believe there will also be drop in the commodity currency market also.