NEWS / Foreign Debt

Save haven status looks set to keep dollar in favour

July 17th - The US economy may be slowing but the continued perception of the dollar as a safe-haven currency is lending support to the greenback as the new trading week gets underway. With little sign of a let-up in the Middle East conflict, geopolitical factors look set to dominate the agenda in the week ahead although Wednesday??™s US CPI reading will likely warrant some scrutiny. Expectations are for an increase of just 0.2% whilst anything above this level is expected to simply initiate another run of dollar buying. Speculation that oil prices could now be on course for $100/barrel and the accompanying impact this would have on economies worldwide ??“ but perhaps more noticeably on that of the US ??“ is largely being overlooked right now. In the near term, US capacity utilisation and industrial production figures may provide additional direction but it seems as if it would take some particularly disappointing data to start pushing investors out of long dollar positions just now. Japanese markets are closed today for a public holiday but the Yen remains weak and slightly off Friday??™s closing levels despite the Bank of Japan??™s decision to finally start hiking interest rates after a six year moratorium ended last week, whilst EUR/USD is also starting the week down at levels not seen since the end of June.

Stuart Scrase and Enis Mehmet