US Dollar Index at 3-year high

The US dollar soared against major currencies on Friday on growing speculation that the Federal Reserve could soon begin to rein in its bond-buying program and after data showed US consumer sentiment hit a 6-year high in early May.

The US Dollar Index is very strong right now: at its highest value since July 2010, closing at 84.24 on Friday.

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U.S. Dollar Index in Longest Rise Since June as Jobs Data Show Growth

The Dollar Index, Intercontinental Exchange Inc.’s benchmark that tracks the greenback against the currencies of six major U.S. trading partners, reached its highest level since Aug. 3. It added 0.5 percent to 82.715. The weekly gains streak was the longest since the five days ended June 1.

The dollar is “holding its own at a time when equities are doing quite well and risk appetite is firming,” Richard Franulovich, senior currency strategist at Westpac Banking Corp. in New York, said in telephone interview. “It’s a potentially momentous correlation shift, whereby the dollar is now a growth currency.”

via Dollar Index in Longest Rise Since June as Jobs Data Show Growth – Bloomberg

China wants Yuan to be more flexible

China is seeking to bolster the use of yuan in international trade and finance to reduce the U.S. dollar’s global dominance and curb its own reliance on the currency of the world’s biggest economy.

China will press ahead with reforms to allow more flexibility in the yuan‘s exchange rate and the remaining barriers to creating a cross-border currency trading zone could be cleared in the first half of this year, senior officials said today.

The yuan has appreciated 1 percent versus the greenback this year and touched a 19-year high of 6.2223 per dollar on Nov. 27. The currency slipped 0.03 percent today to 6.2321 as of 10:05 a.m. in Shanghai, a level 0.91 percent stronger than the central bank fixing of 6.2881.

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China Widens Trading Band for Yuan

The Chinese government has agreed to loosen controls somewhat on the yuan and let it fluctuate more widely. As a result, Chinese goods may become more expensive, especially if growth in the yuan’s value accelerates, Purchasers need to keep a close eye on the Chinese currency, and would be well advised to consider looking elsewhere for cheap products. if it starts rising sharply.

Over the week-end, the People’s Bank of China (PBOC) took another step in the process towards the yuan to the status of a convertible currency by announcing a doubling of its daily trading range.

From today, the Chinese currency will be allowed to rise or fall by 1% each day from its central rate against the greenback. Its fluctuation, upward or downward, was limited until now to 0.5%.

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Copper’s Streak Continues

The most actively traded contract, for July delivery, gained 7.50 cents, or 1.8%, to settle at $4.1860 a pound on the Comex division of the New York Mercantile Exchange. This was the highest settlement price in over three weeks and the fourth consecutive day of gains.

Copper futures settled at a three-week high on Friday as a weak dollar and cautious trading boosted prices.

The thinly traded June-delivery contract ended up 7.25 cents, or 1.8%, at $4.1795 a pound. The contract rose 1.5% over the week.

The dollar fell against the euro and hit a record low against the Swiss franc during the day as currency traders avoided the dollar on worries about slowing U.S. growth. The currency moves stoked the appeal of dollar-denominated commodities like copper, which seem cheaper to investors holding foreign currencies when the greenback weakens.

via Copper’s Streak Continues – WSJ.com.

The U.S. dollar’s vanishing act

Against a basket of currencies, the dollar has lost almost 18% since last June and more than 10% since December, raising the concern that panic selling has already set into foreign exchange trade. The U.S. dollar index fell to 72.933 on April 29, nearing the all-time low of 71.329 set during the financial crisis in 2008.

It is almost becoming an affront to the legacy of George Washington to have to grace the lowly greenback.

While the currency managed to claw back some ground amid turmoil on global markets this week, it remains on the verge of sinking below a pair of important thresholds. The first is the 2008 record low.

But perhaps an even greater indictment of the U.S. dollar is its depreciation against the euro, a currency that’s one sovereign default away from an existential crisis. At US$1.50, the euro will have climbed all the way back from last year’s plunge.

via The U.S. dollar’s vanishing act | Economy | Financial Post.

U.S. Dollar Index Falls to Lowest Since 2008

The Dollar Index fell to its lowest level since 2008 as the Federal Reserve’s pledge to keep interest rates near zero to stimulate growth spurred investors to buy higher-yielding assets.

April 28 (Bloomberg) — The Dollar Index, which tracks the dollar against the currencies of six major U.S. trading partners, dropped to 73.013 as of 8:50 a.m. in London from 73.519 in New York yesterday, after touching 72.871, the least since July 2008. The dollar declined to $1.4851 per euro from $1.4788 after sliding to $1.4882, the weakest since Dec. 7, 2009.

The Australian dollar climbed to a record against its U.S. counterpart amid speculation the South Pacific nation will raise rates to contain inflation. The U.S. currency depreciated versus 13 of its 16 most-actively traded peers and fell to its weakest level against the euro in more than 16 months. The yen appreciated versus most other major currencies after a report showed Japanese investors sold foreign assets last week.

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via Dollar Index Falls to Lowest Since 2008 on Fed; Aussie Advances – Bloomberg.com.