The US dollar surged to an eight-month high against the euro on Thursday as financial markets reeled from fears over EU debt and weak US economic data, driving buying of the safe-haven greenback and yen.
The action in the Yen suggests the dollar bounce is all Euro related. The carry trade is still on, otherwise the dollar would be rallying against the yen. The reality is, the Yen broke swing high resistance on very strong volume.
Yen ETF (FXY):
If the Yen was a true safe-haven, it would be outperforming gold.
Yen Gold:
If any fiat money qualified as safe-havens, they would be outpeforming gold. Do you see any down trends?
Jeffrey Nichols was quoted on bloomberg saying,
“Fear of sovereign debt defaults by one or another European country could benefit the dollar and temporarily hurt gold,” New York-based Nichols said in an e-mail to Bloomberg yesterday. “But gold is the ultimate safe haven and the dollar, without the support of sound monetary and fiscal policies, is a depreciating asset.”
Unfortunately, his comments won't get much attention after today's action, but he's right.
Source: channelnewsasia.com
Source: bloomberg.com
Source: bloomberg.com
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