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The US Dollar firmed up a bit as traders cover short positions, and higher yielding instruments fell on profit taking. The US$ was a bit firmer Tuesday, pulling up from its recent 14 month lows, as investors unwound short positions and took profits in high-yielding currencies after a sharp drop in stocks and commodities. The VIX indicator .VIX, Wall Street’s favourite barometer of market volatility, jumped 9.16% Monday, highlighting the skittish sentiment on stocks, and other riskier assets like growth linked currencies. The US$, a safe-haven when doubts about a global recovery emerge, traded firm around the 76 mark against a basket of currencies, posting its best daily gain since September Monday, pulling further away from a 14 month low of 74.94 on Oct. 21. Savvy market observers said the heavy short positioning on the US$ had made many investors hesitant to sell the “greenback” despite the economy’s weak fundamentals. Data late last week showed currency speculators increased their bets against the US$ in the week to Oct. 20 with the value of net short positions rising to US$18.65B from US$17.99B the week prior. Read more

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Gold futures on the COMEX Division of the New York Merc closed a bit lower Thursday as the USD bounced off of its 14 month low. Silver and Platinum both followed. The most active Gold contract for December delivery dropped US$5.90 or 0.6%, to finish at US$1,058.60 oz. The Dollar saw a slight recovery Thursday as investors worried that China could begin to withdraw its massive stimulus in view of an 8.9% economy increase in Q-3 in order to control the potential inflation. This refueled greenback’s appeal of safe haven amid concerns of global economy recovery. By the end of Gold floor trading time, the dollar index, a gauge measuring the greenback’s value against a basket of major currencies, rose to 75.375 from the 14 month low of 75.085 Wednesday. On the jobs market, the Labor Department said workers filing for unemployment benefits for the first time rose more than expected last week. New unemployment benefits claims rose to 531,000 last week from 520,000 the previous week, higher than economists’ expectations. December Silver was down 28 cents to US$17.545 oz. and January Platinum lost US$4.50 to US$1369.90 oz. Read more

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Former Federal Reserve Chairman Alan Greenspan said yesterday in NYC that he is more worried about the increasing US debt than the weakening US$. In a speech to the Council on Foreign Relations in New York, Mr. Greenspan said he is “not overly concerned” about the most recent decline in the dollar, which has hit a 14-month low against the Euro and other major currencies. “Remember, the dollar surged when the crisis began as we still conceive dollar as safe heaven. We are now back to the levels just prior to the crisis,” he said. Also, Mr. Greenspan expressed concern about the long-term costs to the United States from the increasing national debt, which according to him is the “most worrisome aspect of the economic agenda in the United States.” Read more

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