Wow, it’s actually funny watching the move in the US dollar. If you compare it to the Canadian dollar which has been falling due to the falling oil prices, you’re going to notice an odd thing. The Canadian dollar has been flowing up nearly a 3 pennies over the last few days against the US dollar. Investors are worried that the US dollar isn’t that hot anymore since the economy isn’t expected to recover quite as fast and demand in the US is going to be weak.
It’s tough trading the US dollar now because it’s hard to figure out the direction. Sometimes investors are dumping money into the US dollar when the economy looks bad and takes it out when it looks good. This is the complete opposite.
July 15 (Bloomberg) — Investors are turning less bearish on Treasuries and the dollar as signs the global economic recovery may not be as quick as anticipated bolsters demand for U.S. assets, a survey of Bloomberg users showed.
Participants lowered their expectations for how high yields on 10-year Treasuries will rise and how far the dollar will fall over the next six months after the U.S. unemployment rate approached 10 percent and global stocks declined, according to 2,738 respondents from New York to Tokyo to London in the Bloomberg Professional Global Confidence Index. The outlook on the pound fell from the most bullish level since November 2007 to neutral, while optimism toward Brazil’s real faded.
“Market expectations for a robust recovery are premature,” said Paresh Upadhyaya, who helps manage $21 billion in currencies as senior vice president at Putnam Investments in Boston and took part in the survey. “You’re starting to see the market tone down their expectations. The risk is in the real short term that the dollar may benefit from any bouts of risk aversion.”
Treasuries have returned 0.6 percent in July, their best performance since March as record borrowing by President Barack Obama to stimulate the economy and finance the budget deficit failed to dissuaded buyers. An auction of $19 billion of 10-year notes last week drew the most demand ever, as measured by the amount of bids relative to the securities offered for sale.
Investors became less confident about the global economic recovery, according to the survey. Participants’ confidence in the global economy declined to 39, from 43.6, the highest level since November 2007.
