How Much Bang For Your Buck – US-FOREX.US
Renewed economic pessimism fueled gains for the dollar and yen on Monday, but the greenback’s supremacy is still being questioned.”The U.S. dollar and yen have been absolutely soaring against the euro and Sterling since trading resumed [Sunday],” said Dan Cook, chief market analyst at IG Markets, a European-based Forex and foreign exchange derivatives trading outfit. “In head-to-head competition, though, the yen is showing a great deal of strength against the dollar.”Cook credited the movement to an apparent flight to safe-haven currencies in the wake of weak economic data, like last week’s U.S. labor figures, which were worse than expected. The same forces also appear to have pulled the price of oil down below 64 per barrel as Wall Street’s hopes for a recovery waned. The Energy Select Sector SPDR
exchange-traded fund, which follows energy-related stocks, fell 2.4%, or 1.11, to 45.05.By midday trading, the greenback was worth 1.39 against the euro, and 1.62 against the British pound. The dollar was also worth 94.91 yen, off the 96.08 yen mark on Friday. The PowerShares DB US Dollar Index Bullish Fund
rose 0.4%, or 10 cents, to 24.01, while the PowerShares DB US Dollar Index Bearish Fund
slipped 0.3%, or 8 cents, to 26.65.Meanwhile, the yield on the benchmark 10-year U.S. Treasury note rose to 3.53%, from 3.50% Friday. The iShares Barclays 10-20 Year Treasury Bond
ETF, which follows longer-dated Treasuries, fell 0.4%, or 41 cents, to 108.57, while the iShares Barclays 1-3 Year Treasury Bond
ETF rose 3 cents to 83.80.Like U.S. Treasuries, the greenback is among the world’s safest investments, though its dominance has been challenged-both China and Russia have expressed skepticism on the topic. Meanwhile, India Prime Minster Manmohan Singh’s economic adviser recently supported his country moving away from the dollar.
The news follows the World Bank’s warning to the Group of Eight nations that 2009 remains a dangerous year and the pace of recovery is uncertain. The letter was obtained by Thomson Reuters, dated July 1, to Italian Prime Minister Silvio Berlusconi, the G8 host. World Bank President Robert Zoellick wrote that interventions by world governments appeared to have “broken the fall” of the global economy.Still, Zoellick warned that while some developed countries are considering a policy mix that assumes the recovery is imminent, it is far too early in the developing world to consider such measures. The World Bank estimates that the gross domestic product of developing countries, except for China and India, will decline by 1.6% this year.The G8 summit will be held July 8-10 in the Italian city of L’Aquila.