Monday, May 16, 2005

North Korean or Renminbi

Safe Haven | North Korean Nuclear Testing or Renminbi Revaluation - Which Will Come First?
The euro hit a valley recently as it traded traded as low as $1.2618 on Friday. Lackluster performance of the euro is partly to blame on vigorous US data. Such data will likely lead to the Federal Reserve maintaining its course of monetary tightening. Higher rates will continue to increase the appetite of foreign investors for dollar-denominated assets. By reaching a seven-month high against the euro as well as outshining sterling and the franc, the dollar is on a pedestal suggesting the US economy is on favorable ground. But for just how long will this situation last? The dollar performed poorly against three major currencies for the last three years. Could this be a preliminary upswing?