Geopolitical Turmoil Triggers Safe-Haven Buying; Dollar Hits Four-Week High
In a report, ING analyst Chris Turner stated that the geopolitical uncertainty triggered by the U.S. move to oust Venezuelan President Maduro could prompt investors to favor the U.S. dollar as a safe-haven asset. He noted: “Given the uncertainty surrounding how the situation will unfold in the coming days, investors may be more inclined to hold the highly liquid U.S. dollar.” Additionally, he believes that following the recent strong U.S. third-quarter GDP data, the dollar may see a lagging wave of buying interest, and the currency typically experiences capital inflows in January and February. However, Turner also cautioned that if the U.S. becomes “embroiled in a series of chaotic actions” in Venezuela, investors may begin to worry about the fiscal implications, which could weigh on the dollar. In overnight trading, the dollar index, after hitting a nearly four-week high of 98.79, is currently up 0.2% at 98.68.
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