FOREX-US dollar rises to 1-year peak, yen surges broadly

[D-Mack]

* Dollar touches one-year high, euro hits year low

* Yen surges across the board

* U.S. investors liquidating assets in emerging markets (Adds details, updates prices, changes byline)

By Gertrude Chavez-Dreyfuss

NEW YORK, Sept 11 (Reuters) - The U.S. dollar climbed to fresh one-year peaks against the euro and a major currency basket on Thursday, as nervous investors sought refuge in the greenback's safety amid escalating global slowdown fears.

The low-yielding Japanese yen also benefited from a surge in risk aversion, pushing the euro and the Australian and New Zealand dollars to their lowest in at least two years.


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"This is a continuation of the strong dollar trend that we have been seeing for the last couple of weeks and it seems a lot of people have been coming back into the U.S. market," said Win Thin, senior currency strategist at Brown Brothers Harriman in New York.

"This trend should intensify as more and more money managers get back to the U.S. The U.S. economic outlook is not that great, but I think markets accept the fact that it is poised to come out of this global slowdown first," he added.

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http://www.reuters.com/article/usDol...080911?sp=true

So nothing else is going on?

[metalman]

Re: FOREX-US dollar rises to 1-year peak, yen surges broadly

So nothing else is going on?

global deflation story.

next: global reflation story.

[Mega]

Re: FOREX-US dollar rises to 1-year peak, yen surges broadly

I was working on the miller today (Last job BTW/ No more work in after this!)............and i thought that this $ climb is:-

All the Hedge funds selling whatever they can, oil Gold etc to get $ to pay Banks?
Mike

[D-Mack]

Re: FOREX-US dollar rises to 1-year peak, yen surges broadly

Mish thinks it had to and mentions unwinding yen-carry

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The plain fact of the matter is there were many fundamental reasons for the dollar to rally, and it did. Likewise there were fundamental reasons for Fannie and Freddie to become worthless, and they did, in spite of admittedly massive intervention (manipulation).

I have discussed the dollar at great length recently so let's do a review. I ask readers to consider the following:

People will see what they want to see, but the dollar rallied because there was every fundamental reason for it to rally. Was there jawboning by Paulson and Trichet? Of course there was.

However, the market ignored Paulson's jawboning for forever and a day, while Trichet's statements were in regards to a weakening Europe that is now clearly deteriorating rapidly. The dollar was poised to soar on the story of a weakening global economy that was supposed to decouple from the US but failed to do so.

Carry Trade Blows Sky High

A massive unwinding of the carry trade is now fueling the dollar rally. Huge speculation by traders shorting the Yen and going long the Euro, the Pound, the Australian Dollar, and the New Zealand Dollar is being unwound.

Similarly there was massive speculation by traders shorting the dollar and going long the Euro, the Pound, the Australian Dollar, and the New Zealand Dollar. That too is being unwound.

Those sorry bets were made on the misguided belief that Europe, Asia, and especially China would decouple from the US. In other words, massive bets were made that the tail would wag the dog. Now we see how foolish those bets were, especially for the Johnny-Come-Latelies who plowed into the trade just as it was about to reverse.

New Zealand, Australia, Germany, Ireland, Spain, and the UK are in or rapidly sliding towards recession. This is an enormous fundamental factor and very supportive of a strengthening US dollar.

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http://www.financialsense.com/Market/wrapup.htm