November 28, 2011

Safe Haven Demand For The US Dollar May Be Short Lived

In the meantime, the prospect of sovereign default in Europe is driving “safe haven" demand for the dollar. So, contrary to the political blame game, Europe’s problems are actually providing a temporary boost to America’s bubble economy. However, a resolution to the crisis in Europe could reverse those flows. And given the discipline emanating from Berlin, a real solution is not out of the question.

If confidence can be restored there, each episodic flight to safety may be less focused on the US dollar. Instead, risk-averse investors may prefer a basket of other, higher-yielding, more fiscally sustainable currencies. - in europac.net

Related, PowerShares DB US Dollar Index Bullish (UUP), PowerShares DB US Dollar Index Bearish (UDN)

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.