Top > Business > 2006 > May > 2006-05-24

Dollar Up in Forex Sale

The US dollar has finally rose yesterday in the forex sale market, however, considering the current market, it is not known whether it will continue to rise or plummet back again. The dollar ticked up on Tuesday but stayed shy of a two-week high against the yen struck in the previous session, with investors in forex sale nervous about how long a sell-off in emerging markets and stocks will continue. Spiking volatility across assets has caught the attention of investors and overshadowed the currency market`s focus on the massive U.S. trade deficit.

Profit-taking on bets against the dollar helped the U.S. currency recover last week at the same time as speculators and investors rushed to cash in on winning wagers in gold, commodities and stocks around the world. Some traders say that a large-scale shifting of funds in forex sale out of high-risk assets such as shares in emerging economies and commodities could be positive for the dollar, given that U.S. Treasuries are often bought as safe-haven assets.

However, other traders in the forex sale market said it is difficult to tell where money is escaping to. The dollar surged more than 1 percent against the yen on Monday only to give up all those gains by the end of New York trade, while investors switched funds into the safe-haven Swiss franc. Reflecting the asset volatility, gold plunged almost $100 from a 26-year high before rebounding on Monday. On Tuesday in Asia, gold rose to $661.50, up from a one-month low of $636.20 marked the previous day. Note that gold and the dollar tend to move inversely to each other.