LONDON (Commodity Online): The dollar staged a modest rally off of its recent lows last week. These reports have been anticipating that the dollar would make a floor over the past several weeks, and then move broadly sideways with an upward bias.
This has not happened. It still seems likely to emerge, and last week’s dollar trading activity may mark the beginning of such a turn in the dollar’s near-term fortunes. It is too early to conclude that the low has been made for the dollar, however.
That said, there is much to commend the dollar to investors. As the broader global economy moves toward the end of the recession and anticipates economic recovery, there should be some further shifting in investor attitudes toward a diversified portfolio, however, with investments of greater perceived risks gaining some favor in the minds of investors.
This could continue to keep the dollar lower, even as other investors seek to re-deploy assets in U.S. equities, real estate, and other investments. In this environment, the dollar would be expected to trade sideways in a volatile fashion, still suffering from both short- and long-term economic and financial concerns, while benefiting from expectations of improved profitability on the part of U.S. corporations and a recovery in real estate values.
