Global Selloff Perks Up Dollar

Among major currencies, only the yen holds its ground.
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The greenback was catching a bid Monday as a selloff in global stock market indices weighed on the dollar's counterparts.

The euro was buying $1.413, down from $1.4297 late Friday. The British pound was selling for $2.0263, down from $2.051 in the last trading session.

"I am not sure it's foreigners trusting the dollar as much as it is American money coming home," says T.J. Marta, a fixed-income strategist at RBC Capital Markets in New York.

The rally may be a result of U.S.-based hedge funds liquidating positions held in foreign stock markets and repatriating the cash to dollar-based accounts, rather than cash-rich foreigners making a proactive choice in favor of the greenback, he explains.

Marta also notes that it wasn't that long ago when economists were speculating that the global economy wasn't as linked to the fate of the U.S. as it once was.

"Now, all of a sudden, people are saying the U.S. housing market will impact the global economy," says Marta.

The

CurrencyShares Euro Trust

(FXE) - Get Report

and the

CurrencyShares British Pound Sterling Trust

(FXB) - Get Report

were both losing about 1% in recent trading.

Elsewhere, the dollar was weaker against the Japanese yen, buying 114.1 yen, down from 114.6 yen late Friday.

The

CurrencyShares Japanese Yen Trust

(FXY) - Get Report

was ahead by 0.5% in recent action.

In other currencies, the greenback was rallying against the Australian dollar and the Canadian dollar.