Gold 
“Dizzying ride of the dollar may not be over
After an October that delivered unprecedented volatility and dollar strength, the US currency has reversed direction this month.
The US currency is down 4 per cent from its highs on a trade-weighted basis, having posted its largest monthly rise in 40 years of floating exchange rates last month.
Since hitting a 2½-year high of $1.2332 against the euro on October 27, the dollar has fallen 3.8 per cent to $1.2801. It has also fallen 4.4 per cent to $1.5944 against the pound since hitting a six-year peak at the end of last month.
The only major currency that has fared worse is the low-yielding yen, which has dropped 6.7 per cent against the dollar in November, helped by the rally in equities. ‘The obvious question is whether this move has momentum,’ says John Normand at JPMorgan. ‘We doubt it.’
The dynamics of currency market trading are, in any case, changing as markets reward the currencies of countries with pro-active central banks, rather than punish them for having low yields. This was evident on Thursday when sterling rose slightly, despite the biggest interest rate cut for 16 years.
The dollar’s October rally was driven by massive global deleveraging and repatriation flows sparked by a violent upsurge in risk aversion. As global asset markets tumbled, investors scrambled to unwind positions, especially in emerging markets, which had been funded by selling dollars.”
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