Safe Haven Flight Provides Support for Greenback

The U.S. Dollar paused in its downtrend which began on Thursday’s trading session as investors’ fears of a global growth slowdown temporarily halted their consideration for prolonged dollar softness. Ben Bernanke and the Fed surprised dollar bulls with dovish rhetoric which suggested that the Fed isn’t yet prepared to rein in its monetary stimulus and would prefer to wait until surer signs become more abundant. The growing uncertainty of the dollar’s near term direction against an outlook that suggests an increasingly weaker Yen provided the greenback with some support as investors seek out safe havens ahead of Monday’s read on China’s economic growth; analysts foresee that 2nd quarter GDP will have slowed to 7.5% but a disappointment could not be ruled out.

As reported at 12:10 p.m. (JST) in Tokyo, the U.S. Dollar Index was flat on Friday, trading at 82.762 .DXY after falling to a 3-week low of 82.418 .DXY in the previous trading day’s session, but remains now well off Tuesday’s 3-year peak of 84.753. The Dollar Index is used by investors to assess the dollar’s relative strength against several of its major rivals. The USD/JPY pair was trading at 99.02 Yen, more than 200 pips from Wednesday’s peak of 101.21 Yen. The EUR/USD pair was holding steady at $1.3092, not far from Thursday’s peak of $1.3201.