Wednesday, January 5, 2011

USD Graphic Rewind: Dollar Index Climbs on Hopes for US Economy


http://www.dailyfx.com/forex/fundamental/article/usd_graphic_rewind/2011/01/05/USD_Graphic_Rewind.html


USD_Graphic_Rewind_body_dxy1.png, USD Graphic Rewind: Dollar Index Climbs on Hopes for US Economy
The dollar index succumbed to some early selling pressure in European trade and threatened to reverse Monday’s gains and resume its recent downtrend. However, after solid factory data in the US and a optimistic view from the Fed the dollar managed to shake off these early losses to close higher on the day. The buck also got a boost from softer global equities as they paused after a surging start to 2011 and commodities sold off, with both gold and oil racking up significant losses. The dollar has maintained this bid tone over-night as Asian equities had be soft as commodity-related stocks weigh on broader sentiment.
The outlook for the buck this year remains very positive with the US economy set to continue recovering coupled with the potential of a paring down of QE2 the buck should be set to climb off its own improving fundamentals. This says nothing of the gains it should register against the likes of the yen and euro whose own fundamentals look very shaky and are likely to weigh on the respective currencies against the buck.
Written by Jonathan Granby, DailyFX Research Team
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