US dollar: Relevant reserve currency

dollars is surging.
The dollar has appreciated 7,9 percent against the world’s most-traded currencies, according to data compiled by market analysts.
Instead of depreciating, Treasuries returned 6,4 percent last quarter, the most since the three months ended December 2008.
The US dollar is the only relevant reserve currency and bastion of safety. When S&P lowered its outlook for the nation in April, it cited the dollar’s pre-eminent place among world currencies as a reason for keeping the AAA rating.
When it downgraded the US in August, the company all but disregarded the dollar, mentioning it once in the announcement.
Markets are saying S&P was right the first time. The dollar beat stocks, bonds and commodities in September for the first time since May, showing that in times of turmoil, there are no safer assets than those denominated in the world’s reserve currency.
Central banks have 60 percent of their foreign-exchange holdings in the US currency, compared with the euro’s 27 percent, the next highest.
The dollar was the best performing developed-nation currency besides the yen, gaining 7,2 percent in the past month next to nine peers.
It strengthened 5,6 percent against the euro, 10 percent versus the Australian dollar and 16 percent compared with the Swiss franc.
Europe’s sovereign debt crisis and falling interest rates from Brazil to Turkey helped the dollar rally as investors retreated from riskier assets.
The weakening US economy has also contributed to the currency’s strength. Right now there is no alternative to the dollar.
It’s the depth, liquidity and its ability to pay is what investors are looking for and it being a to go currency a pleasure currency easy to liquidity.
Gold may extend its slide from a record as Europe’s sovereign-debt crisis spurs demand for dollars, eroding the appeal of the metal as an alternative.
Gold plunged 11 percent in September, the most since 2008, as Europe’s worsening fiscal crisis sent the US dollar Index to an seven-month high of 78,863 on September 26.
The precious metal, which reached a record US$1 923,70 an ounce on September 6, seems to be reacting to every headline coming from Europe and a weaker euro, while the dollar index is poised to rally to 89, the highest since March 2009.
The fear is Europe. The dollar will go up significantly as we are seeing people liquidating other assets and buying the dollar and dollar-backed assets.
Europe is nowhere near to finding a real solution. Gold has rallied 22 percent in the past year as investors shunned equities and some currencies.
Prices have slumped 15 percent from last month’s high as investors sold the metal to cover losses in other markets.
Speculators increased their net-long positions in the dollar. In London the pound weakened against the euro after a report showed British confidence in the employment outlook fell for a third month in September to its lowest level since February, underlining the fragility of the economy.
Sterling depreciated versus most of its 16 major peers losing most against Switzerland’s franc and Norway’s krone.
The Bank of England last week boosted its asset-purchase program, known as quantitative easing, by 75 billion pounds (US$115 billion) to 275 billion pounds in a bid to revive UK growth.
There is no massive reason to buy the pound as it stands, the data’s been a bit mixed and has been getting worse. Quantitative easing only gives investors another reason not to buy sterling.
Britain’s currency depreciated 1,4 percent to 87,19 pence per euro in London. It strengthened 0,8 percent to US$1,5684 and fell 1,8 percent to 1,4166 francs.
African Markets
The rand strengthened a second day, leading gains among emerging-market currencies for a second day on a better-than-expected US jobs data and optimism Europe will contain its debt crisis increased appetite for riskier assets.
The rand strengthened by 2,1 percent to trade at 7,8344 against the dollar in Johannesburg.
Investors got good news on employment data to gauge the strength of the US economic recovery, after reports showed faster-than-forecast growth in payrolls and service industries.
Technically and fundamentally the argument for a rand recovery has now strengthened.
Commodity markets
Crude oil climbed to the highest level in two weeks as the leaders of Germany and France pledged to stem the European sovereign-debt crisis.
Optimism is coming back into the market as concerns about the European debt crisis and the US economy heading into recession ease, oil prices are going to climb.
These headlines are a sign that demand will increase. Crude oil rose US$2,43 to US$85,41 a barrel. Gold advanced to trade at US$1 675,60 an ounce.