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The US Dollar Index is once again seeing renewed strength as investors make flight back to safe haven assets which is helping the greenback move higher, supported by Fed Chairman Ben Bernanke’s comments last month laid out a road map for scaling back its asset buying program.<\/p>\n
Latest Dollar Index Rate<\/strong><\/p>\n The ICE US Dollar Index, which tracks the US dollar against a basket of major world currencies was trading at 83.253, 08:41 GMT this morning.<\/p>\n US Data & Policies<\/strong><\/p>\n Better data from the US economy prompted investors to start reconsidering the Fed scaling back its stimulus programme sooner, paving the way for further US dollar upside swings. “The Fed tapering story is likely to remain popular so long as the run of data is at least decent. DXY is a buy on dips, with EUR and CHF weakness key contributors.” commented a research team at Westpac.<\/p>\n However analysts remain divided on the dollar’s short term direction. “Expectations on the Fed’s policy will probably go back and forth, depending on upcoming economic numbers. Still, it seems reasonable to think US bond yields are gradually rising, which should underpin the dollar,” said a trader at a Japanese bank.<\/p>\n “People are rotating out of assets that they overreached for as the grab for yield unwinds,” Brian Kim, a currency strategist at RBS Securities in Stamford, Connecticut, said in a telephone interview. “The dollar will be the beneficiary of people looking to unwind liquidity.”<\/p>\n Meanwhile, analysts at BNP Paribas said the stabilisation in US bonds appeared to be encouraging a cautious rebound in risk positions which should help a number of emerging market currencies and put a squeeze on short positions in commodity currencies.<\/p>\n<\/p>\n