Why US Dollars rised over teh last day?

[CrONoS]

There is something I don't understand.

Considering these graphs:
http://finance.google.ca/finance?q=CADUSD (CDN- US)
http://finance.google.ca/finance?q=CADEUR (CDN-EURO)

US- EURO

http://finance.google.com/finance?q=USDEUR

I was extremely surprised that teh Canadians Dollars dropped this low. Since I thought people would buy Canadian Treasury...

And; what it's even more surprising, US dollars raised his value vs EURO.

Why?

How can people can have confidence in the US dollars?

[Kuciwalker]

Yay, we'll be able to make jokes again soon.

[Jon Miller]

They have confidence that the US will bailout however it can.

JM

[snoopy369]

Confidence in US economy != value of US dollar. There's no reason to be not 'confident' in the US dollar in the sense that it won't be not solvent; and as more people flee the stock market, they do that by... buying dollars, essentially. Supply and demand. Yes, they could buy CAD, but most of the fleers are Americans, and ... we don't like your weird funny money.

[CrONoS]

Do you think it could explain why the value of gold lowered? My rationale is: Since there is a need for liquidity people & institution are selling their stocks and golds in the goal to have liquidity. (or by U.S. treasury)

(Because, it surprised me that gold lowered at the same time than the stock market)

[DanS]

Two possibilities among others...

1) US assets are seen as the safe haven

2) US individuals and companies were repatriating dollars en masse

[CrONoS]

@Dans

1) I have trouble seeing U.S. asset as a safe haven. US banking system seems to suck. US governement balance also suck.

2) That's also my thought. My opinions is they need liquidity, but there is a lot of people/institution who need liquidity, and they sell their asset, repatriating dollars.

Today, I read in the newspaper that some Europeans bank are offering interest rates when you deposit at 6-8% (even 10% in Poland for 3 month term deposit).

[CrONoS]

Is there a reason why US-YEN; behave differently?

http://finance.google.com/finance?q=USDJPY

tx

[Aeson]

Might have to do with the yen carry trade. (I'm not sure how much this happens anymore, but it used to be the big thing.) On good days for the US, borrowing in Japan, converting to dollars, and investing in the US (bonds generally, but anything with a higher rate of return than the interest on the Japanese loan)... on bad days for the US economy... converting back to yen.

Either that or the currency markets are saying that as screwed as the US seems to be, they think Europe is screwed worse.

[Kidlicious]

The trade deficit also shrank.

[DanS]

Originally posted by CrONoS
1) I have trouble seeing U.S. asset as a safe haven. US banking system seems to suck. US governement balance also suck.

The US banking system sucks, except that all other banking systems suck more.

As for Yen-Dollar, that's as Aeson says -- the carry trade is being unwound. The Japanese can no longer defend a weak Yen for their exports.

[Julian Delphiki]

One reason is that investors speculate that EU/Euro will be hit more severely by this financial crisis than US.

[Traianvs]

Originally posted by Aeson


they think Europe is screwed worse.

I read quite a number of finance specialists have that impression.

[Traianvs]

Originally posted by DanS


The US banking system sucks, except that all other banking systems suck more.

Ssh, Asher will be here any minute to refute that claim

[Dr Strangelove]

Maybe because Europe is seen as not able to get its act together and co-operate to save itself?