The dollar remains firm amid the crash of the stock markets and risk aversion

The dollar remains firm amid the crash of the stock markets and risk aversion

Euro plunges below $ 1.24.

The greenback stands up to global sales surge in global stock markets. As investors flee riskier assets, they have sought shelter in the dollar and the yen, which has staked his role as ‘safe haven’. Thus, the greenback advanced against most of its rivals except against the Japanese currency, which has reached trading near their recent highs at 108,500 yen early this morning.

Safe haven par excellence, experts expect to continue teaching muscle towards 108.00 or 107.00 yen per dollar. Singapore bank analysts warn that if the selloff continues taking a run, the Japanese currency at 104.00 yen could be changed per dollar, levels not seen since September 2016. But the dollar also wanted to eat his share of ‘cake risk aversion ‘and the index measuring its performance against a basket of six rival currencies advancing 1.1% since last Friday, when it started the stock market crash, to 89.610 points.

After the issue in the markets in recent weeks has been the weakness of the greenback, traders have been driven by a deserved ‘relief rally’. However, the future is not without risk. “If inflation remains orderly and the market continues discounting policies of central banks converge with that of the US Federal Reserve (Fed),” the dollar will continue downward to $ 1.30 by year-end “says John Hardy, currency strategist at Saxo Bank.

Among other dangers, the expert Danish investment bank also lists “the biggest trade and fiscal deficits in the US As the tax reform favoring increased consumption, most of which goes to foreign goods. This is a structural story. “

THE EURO AND POUND, down

The euro, meanwhile, loses tone below $ 1.24 and fell 0.8% from highs Monday at $ 1.2475. The common currency is left soothed by the stake of its US rival, although the words of the President of the European Central Bank, Mario Draghi, have not gone unnoticed by investors. The Italian has pleaded “not sing victory” still on inflation in the eurozone and has called for “patience and persistence” regarding monetary policy, while warned that have emerged “new headwinds” due to the “recent volatility in the exchange rate.”

However, for Kathy Lien, founder of BK Asset Management, the European currency has been hit by recent economic indicators that have left a mixed result. “This week the euro gives the foreground to other currencies, especially the dollar and the pound, but his lack of momentum suggests a further decline against the ‘greenback’ is expected,” warns the expert of the investment firm USA.

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