Corporate foreign exchange news
Dollar 'reverting to fundamentals'
Monday, 10 August 2009 09:03:24 GMT

The US dollar may be reverting to foreign exchange fundamentals after months of being treated as a safe-haven currency, it has been claimed.Analysis carried out by the Wall Street Journal has indicated that the greenback may be set for a rally as traders begin to use the currency as a bet on interest rates or economic data.Since the onset of the financial crisis, the dollar has moved upwards as macroeconomic conditions have worsened and weakened on improved prospects for recovery.However, after the release of unexpectedly strong jobs data last week, the dollar enjoyed a rise, suggesting a change in strategy on the trading floor.As such, the paper is predicting that the dollar could enjoy a strong rally as the global economy pulls out of its tailspin. Earlier on in the week, the dollar was still affected by safe-haven trading, with a rally in equity markets pushing the greenback lower as traders moved into riskier currencies with invigorated confidence.



