Forex News UBS's foreign exchange risk index dropped to a three-week low, helped by tighter high-yield spreads over Treasurys, falling equity volatility and crude oil futures. "For the near term, the dollar is still trying to form a base. Declining risk aversion amid calming credit market, better-than-expected earnings news and falling oil prices are of help. Repeated assurances over the future of GSEs have managed to calm markets, too...However, we still doubt this is the end of dollar weakness," said Benedikt Germanier of UBS. "U.S. data next week is likely to show that the housing market isn't bottoming, yet. Equities, while recovering, remain trapped in a bear market. And importantly for capital flows, major SWFs have failed to pre-commit on U.S. dollar investments."
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