The US currency as a safe haven
The dollar is strengthening against the euro and the pound due to Israeli-Palestinian fighting and fears that the conflict will not spread beyond the Gaza Strip. The US currency benefits from its position where investors see it as a safe haven in times of geopolitical uncertainty. The euro lost 0.4 percent to USD 1.0544 around 17:00 CET. The dollar index, which tracks the dollar’s performance against a basket of six major world currencies, added 0.2 percent to 106.23 points at the same time.
Is it good to hold US dollars?
Israel’s response to an unprecedented multiple attack by Palestinian militants from the Islamist group Hamas in the Gaza Strip “will change the Middle East”, Israeli Prime Minister Benjamin Netanyahu said today. Investors are wary of taking more risks as Israel said it had called up an unprecedented 300,000 reservists and warned residents of parts of the Gaza Strip to leave. These are the latest signs that Israel may be planning a ground attack to defeat Hamas, according to Reuters.
“If war breaks out anywhere in the world, it’s good to hold US dollars. So it’s no surprise that the greenback started trading with some gains,” said Commerzbank analyst Ulrich Leuchtmann.
The dollar was also supported by Friday’s data, according to which employment in the United States increased by the most in eight months in September. The pound lost 0.2 percent to $1.2215 against the dollar at the same time.