The threat of a worldwide recession continues to worry investors who are cutting their exposure, as evidenced by the U.S. Dollar’s slight gain on Thursday. The U.S. currency stayed within striking distance of a 24-month high against the Euro as well as a basket of major currencies.
Against the Euro, the Japanese Yen reached a 6-year high, and was at its strongest position in more than 7 months against the U.S. Dollar. It appears that traders are anxious to be rid of unsafe carry trades. Moreover, the global stock markets remained weak as a result of the ongoing financial turmoil.
Argentina’s recent measure to nationalize state pension funds in an effort to shore up their faltering economy was viewed as “desperate” and has investors in Asia and other emerging markets worried about the future of the world’s economy. According to Ian Stannard, a senior foreign exchange strategist at BNP Paribas, emerging market tensions will continue so long as the recent financial pressures persist.
The Euro lost .3% versus the U.S. Dollar, trading at $1.2806, near a 2 year low which was met on the EBS platform earlier in the day. Against a basket of major currencies, the U.S. Dollar .DXY traded at 85.585; earlier in the day it reached 86.070, a 2-year high.