US dollar is gaining today on the Forex market as traders look for safe haven. Uncertainty is causing problems, and that is prompting traders to look to capital preservation and stability. Greenback is backed by the most stable taxpayer base in the world, so it’s no surprise that it is on the rise today.
For the most part, US dollar is higher as traders express uncertainty about what is happening in Europe. European manufacturing contracted in April, as shown by the preliminary composite PMI for the eurozone. The news triggered concerns about eurozone economic growth and resulted in euro selling against the US dollar. Also not helping matters is the possibility of an early general election in the Netherlands (due to budget disagreements) and a runoff in France, with Nicolas Sarkozy in second place.
With all this uncertainty, Forex traders are turning to low beta currencies like the US dollar and the Japanese yen. Dollar is gaining the upper hand as traders recognize that the economy is in better shape than the eurozone economy, and as all eyes remain on the eurozone sovereign debt situation.
At 14:12 GMT EUR/USD is down to 1.3121 from the open at 1.3185. GBP/USD is down to 1.6093 from the open at 1.6124. USD/JPY is also lower as the yen gains the upper hand: 81.1560 down from the open at 81.5165.
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