FT: Dollar at Crossroads Amid Brighter US Outlook
FT.com --This week will be crucial in determining whether the dollar has broken free from its six-year downward trend, as speculation mounts that the U.S. is in the best position to emerge quickly from the economic downturn.
The dollar index, which measures its value against a basket of six major currencies, put in its best performance for over three-and-a-half years last week and boosted the dollar to its highest level for four months (see chart above).
Ulrich Leuchtmann at Commerzbank said in a note he expected the dollar to rise “like a phoenix.” He said low U.S. interest rates were not a burden on the dollar but an attraction, proof that the Federal Reserve was able to react quicker to turmoil than other central banks.
He said that in a very short period, “sentiment turned by 180 degrees – the market now believes that the US economy once again will be able to leave a crisis behind very quickly.”