Dollar Is Biggest Winner in May as Investors Drop Stocks
By John Detrixhe - May 31, 2012 10:56 PM ET
The dollar posted its biggest monthly gain since 2011 in May, beating bonds, stocks and commodities for the first time this year as investors sought refuge in U.S. assets while Europe’s sovereign crisis worsened.
Intercontinental Exchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, climbed 5.5 percent in May. Global fixed-income assets gained 1.1 percent, including reinvested interest, Bank of America Merrill Lynch indexes show. The MSCI All-Country World Index of stocks lost 8.9 percent with dividends, while the Standard & Poor’s GSCI Total Return Index of metals, fuels and agricultural products fell 13 percent.
“The dollar’s had a fabulous month,” Camilla Sutton, chief currency strategist at Bank of Nova Scotia’s Scotia Capital unit in Toronto, said May 30 in a telephone interview. “We’re in a bout of significant risk aversion, which drives funds to the deepest capital markets in the world, the U.S., and creates a significant bid for the U.S. dollar.”
Gross domestic product worldwide may expand 2.5 percent this year, down from 2.9 percent in 2011, according to the median estimate of economists in separate polls by Bloomberg surveyed by Bloomberg. Yields on Treasuries due in 10 years fell to a record 1.53 percent this week and those of two-year German bunds declined to zero.
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