By William L. Watts and Sarah Turner, MarketWatch
FRANKFURT (MarketWatch) — The dollar index pushed above the 80 mark for the first time in a month Wednesday, defying expectations that the Federal Reserve’s latest round of quantitative easing would drive the currency lower as investors instead showed a preference for so-called safe-haven assets.
The ICE dollar index DXY -0.09% , which measures the greenback against a basket of six other currencies, climbed lately to 80.038, up from 79.973 in late North American trade Tuesday.
The dollar index last stood higher than the 80 mark exactly one month ago.
“Defiantly ignoring the negative prognostications of the vast majority of currency strategists and commentators, the dollar has recorded a modest appreciation of 1.5% since the Fed announced unbounded QE four weeks ago,” said Michael Derks, chief strategist at FxPro in London.
Wednesday’s advanced built on gains scored Tuesday, when the dollar saw some buying as investors fretted about the world’s economic prospects after the International Monetary Fund downgraded its global growth estimates for 2012 and 2013.
Derks, in a note to clients, cited a number of explanations for the dollar’s resilience in the face of the supposed currency debasement threatened by the Fed’s added stimulus measures.
Those include evidence the U.S. economy has been stronger than expected, while the jobs outlook looks more upbeat as retailers announce plans to hire thousands of temporary workers.
Also, Europe and Asia remain vulnerable, while risk appetite remains defensive, lending support for havens.
On top of that, several major U.S. firms have been repatriating funds ahead of their fiscal year-end while traders had loaded up on short dollar positions on expectations that the currency will struggle as the so-called fiscal cliff approaches.
Derks expects the index to test technical resistance at the 80.80 level in the short term. “Right now, it probably pays not to underestimate the buck,” he said.
The WSJ Dollar Index XX:BUXX -0.06% , which measures the U.S. unit against a wider basket, was unchanged at 69.96.
“Yesterday’s images of protests in Greece during Angela Merkel’s visit reminded markets that severe austerity measures imposed in Europe come at a large social cost, casting a dark shadow of doubt on a quick resolution in Europe,” they said.
Greece’s main public- and private-sector unions on Wednesday called for a nationwide, 24-hour general strike to take place on Oct. 18 in protest of additional austerity measures. The strike coincides with the first day of a two-day summit meeting of European Union leaders. See: Greek general strike called for Oct. 18 .
The euro EURUSD +0.0629% changed hands at $1.2873, little changed from $1.2879 in late North American trading on Tuesday.
The British pound GBPUSD +0.1043% traded at $1.6012, up slightly from $1.6001, while the Australian dollar AUDUSD +0.4448% reached $1.0247, up from $1.0207.
The dollar also was little changed against the Japanese yen USDJPY +0.1114% , buying ÂĄ78.31, versus ÂĄ78.29 late Tuesday.
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt.
Sarah Turner is MarketWatch's bureau chief in Sydney.
