Dollar Index hangs near 83 as investors mull latest news surrounding Europe’s debt crisis

The dollar is hanging onto recent gains that saw the US Dollar Index pass through 83 in trading on Wednesday as analysts and investors mull over the latest news surrounding Europe’s debt crisis in multiple euro zone countries.

Latest Dollar Index Rate

The ICE US Dollar Index, which tracks the US dollar against six major world currencies was trading at 82.950 – 11.32 GMT today, from the session open of 83.125.

Moving Assets to the US Dollar

Wealth managers have been moving client assets into currency havens in recent weeks, with the Swiss franc and the US dollar among the biggest beneficiaries.

Private bankers in London said that clients with a more negative view on the outcome for the eurozone were moving into US dollar based assets, while the Swiss franc was viewed as a “halfway house”.

Charles MacKinnon, chief investment officer at Thurleigh Investment Managers, said the wealth manager had been buying Swiss corporate bonds and adding to Swiss franc deposit holdings for clients based in euros. But Thurleigh is also among those moving assets out of Europe altogether.

“If there is global mayhem, the US dollar will be the only credible survivor. A modest collapse will have the Swiss franc doing better on a relative basis,” said Mr MacKinnon.

Traders Stunned by Spanish Bond Yields

The market was stunned yesterday by a spike in the 10 year bond yield in debt ridden Spain to 6.6 percent, close to the 7 percent that propelled its smaller euro partners such as Greece, Ireland and Portugal to seek bailouts, the dealers said.

Pessimism toward the financial situation in Spain grew amid fears that the country’s problems will further exacerbate the debt crisis in Europe, they said.

In addition, sentiment remained cautious ahead of new parliamentary elections in Greece scheduled for June 17 that are expected to dictate the behavior of global financial markets, the dealers said.

As a result, traders dumped their holdings in most of the regional currencies, flocking into the US dollar in a bid to avoid further losses.

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Dollar Index hangs near 83 as investors mull latest news surrounding Europe’s debt crisis