Safe Haven Demand Sends US Dollar Surging
Safe haven demand is high today as Italy moves to the brink of default. With bond yields surging, and other eurozone countries fighting their own sovereign debt battles, Forex traders are looking for safe haven — and that means the US dollar.
US dollar is surging today on the Forex market, especially against the euro. It seems that a crisis is a regular occurrence in the eurozone, and eventually leaders won’t be able to put off the inevitable. All of the wrangling over Greece failed to come up with a plan to contain the sovereign debt crisis, and Greece, obviously, isn’t the only problem in the eurozone.
The fact that Silvio Berlusconi is set to resign isn’t doing much to change things. Indeed, many think that the damage is done. As a result, it’s time for many to regroup. With global equities heading much lower, and with commodities sliding a little bit, it is no surprise that the US dollar is gaining ground, especially against high beta currencies like the euro and the pound.
For now, risk aversion is likely to keep the US dollar higher in Forex trading. It will take a turnaround in sentiment, and possible a real solution for the eurozone, to overcome dollar strength.
At 14:42 GMT EUR/USD is much lower at 1.3582 than the open at 1.3834. GBP/USD is down to 1.5929 from the open at 1.6089, and USD/CAD is higher at 1.0206, up from the open at 1.0088.
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