USD INDEX GRAPHIC REWIND
The dollar index
(DXY) had a choppy day of trade yesterday, starting the European session well bid as regional equities continued to tumble. Going into the N. American open the euro
pared its over-night losses despite the Dow
opening below 10,000. As the euro continued to pare its 200 point drop sentiment picked up and US shares began to climb toward higher ground and managed to end the session mostly up in a massive reversal of triple digit opening losses. This put the dollar under some pressure as investors liquidated dollar holdings to buy into the rally. Asian markets have followed their American counterparts higher over-night as they rebound from 10-month lows set yesterday. Tensions out of N. Korea and continued concerns regarding Europe will keep the underlying safe haven bid for the dollar firm.
Looking ahead, we potentially could see the dollar index give up more of its recent gains today if the euro manages to break higher and global equities continue to perform well. However, we don’t expect this to be much of a reversal day, more likely a day of consolidation following recent heavy losses in equities and commodities which may have reached over-sold levels and need to correct higher.
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