Weekly Losses of U.S. Currency

The strength of the U.S. dollar was severely tested this week by the bad macroeconomic indicator, and the U.S. currency passed this test not very well, rising questions about its credibility as the safe currency.

The dollar’s performance against the euro, the Great Britain pound and the Japanese yen followed the same trend. At the beginning of the week the greenback rose on the optimism, brought by the China’s promises to lift the two-year yuan’s peg to the dollar. But then the terrible news from the U.S. housing market have stroke, plummeting the dollar. The experts say that the 300,000 house sales in the U.S. is the lowest monthly sales figure ever recorded in the U.S. stats.

The U.S. dollar tends to profit from the pessimistic outlook for the global economy, and we have plenty of reasons for the pessimism. The problem is that the dollar itself is one of the main reasons for this pessimism; therefore it weakened, not gained. This makes us question: will the U.S. currency retain its place as the safe haven? We shall see.

EUR/USD closed at 1.2384 after opening at 1.2427 and reaching its weekly highest level of 1.2465. GBP/USD closed at 1.5058 after it opened at 1.4857. USD/JPY fell to 89.26 from the opening price of 90.40 and its highest level this week of 91.47.

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