Dollar Hits Two-Year High Against The Euro

“This is just another stage of the credit crisis,” said Birinyi Associates analyst Cleveland Rueckert.

“Now we’re seeing the effects in world economies of the trickle down effect of the last year and a half.”

The sell-off in commodities has hit gold, oil, base metals, sugar and grains and is tied to the soaring dollar. The dollar hit a two-year high against the euro on Wednesday as investors move away from investing in foreign markets and look to the dollar as a safe haven. Whereas earlier in the year many investors hid in commodities pushing prices higher than demand warranted, now there’s a big move to cash, Rueckert said. This hurts dollar-priced commodities, which appear cheaper as the dollar gets stronger.

The euro fell to $1.2886 against the dollar from $1.30, while the pound fell to $1.6208 from $1.6698.

Other currencies are also depreciating as central banks try to inject capital into their financial systems. The United States has been doing the same, but the dollar is still benefiting as a safe-haven play.

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