By David Frank, Chief Market Analyst<\/p>\n
Despite the losses through the second half of last week, the US Dollar Index saw its first weekly advance in over five weeks. It also was the Buck\u2019s best performance (2.6 percent rally) since October 2008. The comparison in performance should represent an easy bridge to fundamentals. Three years ago, the market was dealing with the worst financial crisis and economic recession the world had seen since 1929.<\/p>\n
Why is the Dollar rising? The first consideration is manipulation. The Japanese Finance Ministry\u2019s effort to drive the value of its own currency down led to an incredible 3.2 percent rally for USDJPY. In plainer words, the dollar\u2019s value increased.<\/p>\n
Manipulation, the intervention or indirect through policy, is now common place. Efforts by Japan and Switzerland to push their respective currencies lower are common place. Direct intervention rarely meets lasting success. Why? \u00a0Because, this practice of manipulation, fights the elemental demands for safe harbor currencies. Even more problematic is consistent policy efforts. In the comparison between the US, Japanese and Swiss currencies, it should be noted that the Dollar is the weakest of the group of safe haven currencies. Why? The US Federal Reserve has instituted an unprecedented stimulus program.<\/p>\n
The more active force behind the upswing in the US Dollar this week was the spread of financial trouble from Euro zone to the US itself. The fall of MF Global (once a FED Primary Dealer) was triggered by a large holding of bad European government debt. Should European banks who are parking more capital with the ECB and Fed while demanding more dollars to meet another crunch, this European problem can easily spill over to States. Should Italian government yields rise above 7 percent and then fall, we will see even more US banks with exposure issues. With all \u00a0this said, how long can the dollar continue to remain strong?<\/p>\n
For more information on forex<\/a> trading please visit us at Ava.<\/p>\n DISCLOSURE & DISCLAIMER: THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY AND NOT TO BE CONSTRUED AS SPECIFIC TRADING ADVICE. RESPONSIBILITY FOR TRADE DECISIONS IS SOLELY WITH THE READER. \u00a0FOR MORE INFORMATION AS WELL AS UP TO DATE FOREX ANALYSIS VISIT Fx-Insights: Daily forex news<\/a>.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Despite the losses through the second half of last week, the US Dollar Index saw its first weekly advance in over five weeks. It also was the Buck\u2019s best performance (2.6 percent rally) since October 2008. The comparison in performance should represent an easy bridge to fundamentals. Three years ago, the market was dealing with the worst financial crisis and economic recession the world had seen since 1929.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-25008","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/25008","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=25008"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/25008\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=25008"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=25008"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=25008"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}