Wednesday, 11 Aug 2010

Dollar Surges on Safe- Haven Demand

The U.S dollar surged the most against the euro in 19 months a day after the Federal Reserve said U.S. economic growth slowed, fanning concern that the global recovery will falter. The greenback strengthened as much as 2.4 % the most on an intraday basis since Jan. 5, 2009, to $1.2864 per euro, and 1.2% to $1.5660 vs. the sterling According to analysts the fact that the Fed is now acknowledging slower growth than expected in the near term has hit risk assets. And that's bringing back safe-haven flows into the dollar, they said. The dollar appreciated even as Commerce Department data showed the U.S. trade deficit expanded $7.9 billion, the most since record-keeping began in 1992, to $49.9 billion, from a revised $42 billion in May. Market players noted that the dollar may advance further as U.S. economic growth rebounds and other economies start to show signs of slowing.