The dollar is behaving like a safe haven again on Friday for the first time in a long time, up on the euro and the Japanese yen.

That’s more like normal, and quite a change from a lot of this year where the euro has appreciated on the dollar when investors are nervous.

The dollar is up 0.4% on the yen, and 0.3% on the franc, while the euro is down 0.5%. CHF=EBS, Why? Well a lot of it is to do with oil. The U.S. is the world’s biggest exporter of oil, and Europe and Japan import a lot.

“The eurozone is an oil importer so higher prices are negative for trade balance and disposable income,” said analysts at Societe Generale.

ING think the dollar isn’t necessarily back as a safe haven, as while they agree it should be gaining on the oil move, “in other conditions the (dollar index) rally would have been much larger.”

“But the dollar’s traditional correlations have disappeared of late, and it’s likely that the 1.5% drop in S&P 500 futures is doing more to cap gains.”

It’s not just oil however. Citi note that part of the reason the correlation between risk off and the dollar broke down this year, was the risk-off was driven by U.S. specific factors. Not the case here.
Source: Reuters