Dollar still a pleasure currency

protect their assets from money-losing trades.
The dollar is regarded as the liquid haven currency easy to liquidate and has a broad trade basis against other currencies. At the moment given the global risk aversion and the technical analysis the bias is in favour of the dollar as investors are piling into the dollar.

The greenback has appreciated 3,1 percent in the past month and the euro has fallen 1,7 percent. A lot of traders have increased bets that the euro will fall against the dollar to the most in more than a year.
The euro weakened 0,6 percent to US$1,3696 paring its weekly advance to 1 percent. The single currency depreciated 1,1 percent to 104,82 yen.
The dollar added 0,2 percent to 76.96 yen. The dollar index which measures the greenback against the currencies of 6 major US trading partners, trimmed a weekly decline as concern the world’s largest economies are slowing, fuels demand for the safest assets.

The dollar index gained 0,4 percent to 76,554.
The market has been selling some pain currencies apart from the euro especially against the dollar.
The Swedish krona and the Norwegian krone all weakened on speculation rising volatility in the financial markets is deterring investors from taking positions in these currencies.

Europe’s debt crisis is causing violent moves especially in the currency markets leading investors to favour safe bets than emerging market assets and also reducing bets on riskier assets.
As long as risk appetite is low the bias will be in favour of the dollar. Emerging market currencies are under a downward pressure as the European debt crisis prevails in the market and that deters risk taking.
There is growing concern about the outlook for exports from Asia and Africa given the conditions in the US and Europe as this will dim demand for exports and affect exchange rates.

The international policy makers have pledge to lend dollars to the Euro zone banks to help calm investor sentiment.
All of the moving parts are directionally biased in favour of the US dollar bids for safe haven flows.
The market is aggressively selling the euro and shockingly investors are also buying Singapore dollar apart from the US dollar basing everything on the fundamentals.

Why Singapore dollar, reason it has well managed debt with a budget surplus of 2,5 percent and growth outlook of 5 percent.
Fundamentally the US dollar is not a to go currency despite it being easy to liquidate, technically the dollar is a favoured currency. The Federal Reserve has kept interest rates low and increased differentials by so doing giving support to the dollar.
African Markets

In Africa the rand continued to decline as risk sentiment and external shocks still remain a threat for the rand as we see Europe’s debt sapping demand for high yielding assets.
South Africa’s rand was one of the worst performing currencies. Its central bank meets this week, as unemployment and inflation rates remain high.

The rand fell by 2 percent to 7,7375 per dollar. Risk appetite still remains low as this has weighed so much on the rand and this has sapped demand for riskier assets. For a while now the Federal Reserve has been hinting on another round of quantitative easing that could weigh down on the dollar and give the rand a much needed boost. Given the global risk aversion money has been flowing out of riskier assets to better asset classes like the US dollar.

Commodities
Crude oil dropped 2,6 percent to US$85,70 a barrel on concern a weaker economic growth in the US the world’s largest consumer of crude and Europe will hurt demand.
That saw Norway’s krone fall as oil prices declined. The krone dropped 1,9 percent to 5,6811 per dollar from 5,5738.It declined 1.1 percent to 7,7759 against the euro from 7,6894.
Everyone has their eyes on Europe at the moment, crude oil fell 2,6 percent to US$85,70 a barrel. Crude oil tested those resistance levels at US$90,00 a barrel but failed to breakout at those levels only to settle at US$85,70 a barrel.

Gold declined to US$1 785,90 an ounce as the fear of recession, and the fear of worse economic numbers is weighing on other commodities and stopping gains. A stronger dollar has since reduced demand for any alternative asset especially if you look at that decline in gold.
Investors still believe the world is in trouble or is in further economic disruption and that makes gold the story, a good safe haven asset and good inflationary hedge. At such levels this makes gold a buy given the market conditions.