Nov 29 (Reuters) – If U.S. fiscal woes set off a market
downdraft, this time the dollar could actually be a beneficiary.
Negotiations over the “fiscal cliff,” a mix of automatic tax
rises and spending cuts, are ongoing. Though a deal of some sort
will probably be struck, there is a real chance of a
Stocks, of course, would suffer and Treasuries
rally, even if an inability to strike a credible
deal over the fiscal cliff makes the United States as a borrower
look, well, a bit lame.
Particularly dangerous, at least for equities, would be any
chain of events which ends with another downgrade of the U.S.
The lack of other credible safe havens means the dollar
should actually rally.
“When you remove the majors from safe-haven status, the
dollar has to benefit no matter where the trouble comes from,”
said Adnan Akant, head of foreign exchange at fund manager
Fischer Francis Trees & Watts.