Global Economic Outlook Remains Grim, Pushing Dollar Higher

The US dollar surged today versus the Great Britain pound and the euro as the signs of the global economy’s slowdown spurred the investors to look for the safer currencies. The yen outperformed the greenback as the concerns for the US economy made the Japanese currency more appealing as the safe currency.
The Standard & Poor’s 500 Index went down by 2.1 percent and the Stoxx Europe 600 Index slipped 1.8 percent. The deficit of the US trade balance increased to $49.9 billion in June, while the forecast predicted it to stay at the $42.0 billion level. The report that the industrial output in China expanded with the slowest pace in 11 months also affected the sentiment on the markets, turning it to the risk aversion.
The mood among the investors remains rather pessimistic. Such mood is good for the dollar, but the troubles with the US economy make its less attractive than other safe currencies, like the yen.
EUR/USD dropped to 1.2897 from 1.3157 today as of 15:36 GMT. GBP/USD fell from 1.5849 to 1.5662, while USD/JPY traded near 85.39, following the slump to 84.73.

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