After slipping yesterday on worries caused by emerging markets, the dollar was rebounding nicely against the euro Thursday.
The main cause of Wednesday's slide: concern that Argentina, Latin America's third-largest economy, may be on the brink of debt default, an event that could ricochet negatively throughout other emerging markets. But the dollar has recouped its losses against the euro as traders' concern over Argentina subsided. Most recently, the euro had fallen to $0.8514, having closed yesterday's session at $0.8595.
Greenbacks Uber Alles, it seems. "Although there is still an uncertain investment climate in Argentina, the dollar's recovery illustrates that emerging-market jitters only represent a short-term bump in the road for the U.S. currency," the analysts at
wrote in this morning's
Currency Market Analysis
Helping matters for the dollar was a strong showing by the U.S. stock market after last night's earnings announcements. Last evening, software juggernaut
said that it
would beat Street estimates for fiscal fourth-quarter sales, while
strong-enough results of their own. The
Dow Jones Industrial Average was lately up more than 100 points, while the
Nasdaq Composite Index was more than 70 points higher.
Domestic stock market strength wasn't enough to push the dollar higher against the yen, which was bolstered by a large-scale unwinding of so-called carry trades. With interest rates effectively at 0% in Japan, many investors choose to borrow in Japanese yen and convert the proceeds to foreign currency to reap the benefits of higher interest rates. Demand for yen rises when investors unwind these positions.
The dollar had lately fallen to 123.7 yen, down from 124.36 yen at yesterday's close. The euro took a harder hit against the yen, recently trading at 105.34 yen, down from yesterday's close of 106.84 yen.
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