March 13, 2013
THERE'S ONLY ONE SAFE HAVEN:
Stars align for big dollar bull run (Michael Mackenzie, 3/12/13, Financial Times)
The stars are aligning for a major bull run in the dollar. As America emerges from the Great Recession in better shape than the rest of the developed world, the US currency is on a roll.A wave of upbeat economic figures, the latest being Friday's robust February jobs data, have pushed the 10-year benchmark Treasury yield back above 2 per cent and left the S&P 500 stock market index sitting just 1 per cent below a record high. And that is good news for the dollar.On a trade-weighted basis, the world's foremost reserve currency has marched 4.5 per cent higher over the past five weeks - gaining with relatively risky assets such as equities as US recovery prospects have brightened - while the euro, sterling and yen have all retreated. [...]This relative US outperformance is restoring the role of interest rates to foreign exchange markets. Put simply, the rise in the dollar is attracting more foreign investors wanting to own US assets that generate additional currency gain.
Posted by Orrin Judd at March 13, 2013 4:36 AM