Financial Markets Review by Lloyds TSB

Are cracks beginning to appear in the dollar negative view that has been a leading characteristic of the currency markets in recent months? It is beginning to look that this is the case.

Are cracks beginning to appear in the dollar negative view that has been a leading characteristic of the currency markets in recent months? It is beginning to look that this is the case. Since hitting a yearly peak in November, the euro has been sliding against the US currency. Signs are that this slippage gathered pace in December, with the US dollar also up against a range of other currencies. Part of the reason for dollar appreciation appears to be talk of withdrawal of quantitative easing policies that have been flooding markets with public-sector induced liquidity. Another factor is that economic data are now showing that the US recovery is stronger than that of other comparable developed economies, though it started three months later than that of Japan, Germany and France.

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