Despite US economy ,downturn and the markets are pricing in dramatic interest rate cuts, so why is the US dollar pushing higher? The answer, it seems, lies in broad-based global demand for long-term US government debt. When investors become spooked by risky market conditions (as would be reasonable given recent events), they move their capital from stocks and other higher-risk investments to long-term US Treasury bonds. While these offer very little return, they are considered nearly risk-free. The assumption is that such an investment can only go meaningfully awry if the government itself collapses.
traders are cashing in their investments for US dollars and using them to buy US Treasury Bonds as a safe-haven asset.
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