Will the Dollar Rebound Before 2009 Ends?

The dollar had one of the best weekly performance in months gaining versus most of the 16 main traded currencies as the Group of 7 suggested that a strong greenback is important to guarantee a fast and sustainable world economic recovery.

Multiple finance ministers and central bank policy makers from the wealthiest nations in the world affirmed in a G-7 meeting which took place in Istanbul that a strong dollar is essential for the stabilization of the world economy, providing support for the U.S. dollar to touch a one-month high versus the euro and erase previous looses versus several key-currencies. North American officials like Treasury Secretary Timothy Geithner and ECB President
Jean-Claude Trichet agreed on the importance of a strong dollar to maintain the world economy in a recovery path, and its position of main reserve currency should remain in currency markets, adding confidence to the dollar outlook.

Even if key central bank personnel are agreeing that a strong dollar is fundamental for the economic scenario to improve, the situation among traders may not be in total concordance with policy makers’ opinions, according to analysts. Mixed economic data is still playing an important role in the dollar’s volatility, and it is hard to determine what direction the dollar, the euro, and the economic conditions around the world will take towards the end of the year.

EUR/USD closed the week at 1.4580. GBP/USD closed at 1.5941.

If you have any questions, comments or opinions regarding the US Dollar,
feel free to post them using the commentary form below.