Friday, September 26, 2014

Buoyant Dollar Recovers Its Luster, Underlining Rebound in U.S. Economy

By Landon Thomas Jr., NYT

September 25, 2014

President Obama’s handling of the economy may be reviled by his political opponents, but he is receiving support from a surprising quarter: foreign exchange traders.

The United States dollar, after one of its most prolonged weak spells ever, has now re-emerged as the preferred currency for global investors. Across trading desks in New York, London and elsewhere, analysts are rushing to raise their dollar forecasts based on the resurgence in the American economy.

In part, this bullish mood is tied to signals from the Federal Reserve that it will soon stop its bond-buying program — a change that would lift interest rates and buoy the dollar.

Yet the recent rally in the dollar — it has gained about 3.2 percent against the euro since Aug. 20, and about 8 percent against the yen since July 1 — underscores expectations that the United States economy will continue to grow at a faster clip than that of Europe, Japan and even large emerging markets, all of which are seeing their economies stagnate.

(More here.)


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