What's behind the dollar bid

I spoke with Reuters earlier today about the US dollar and this is what came out:

“The market is slowly pricing in a worse outcome this winter in Europe and that’s the major reason the dollar’s stayed so strong,” said Adam Button, chief currency analyst at ForexLive in Toronto. “While the U.S. outlook is deteriorating, it still looks better than Europe and much of Asia.”

TTF prices later reversed and that's helped to life the euro back to unchanged on the day.

There were two other things I spoke about that I think are important.

1) Equity flows are an increasing factor for the US dollar.

2) The yen is losing its safe have status

The second point is a big one and is a tipping point in the global foreign exchange Foreign Exchange Foreign exchange (forex) represents the practice of exchanging or converting a specific country’s currency into another country’s currency. A popular example includes the conversion of the Australian dollar (AUD) into US dollars (USD), and/or vice versa. There are a variety of mediums this can occur over. In its most basic form, the exchange of currencies can be handled over a physical counter, such as in an airport or currency exchange.This can also take place over the internet through the use Foreign exchange (forex) represents the practice of exchanging or converting a specific country’s currency into another country’s currency. A popular example includes the conversion of the Australian dollar (AUD) into US dollars (USD), and/or vice versa. There are a variety of mediums this can occur over. In its most basic form, the exchange of currencies can be handled over a physical counter, such as in an airport or currency exchange.This can also take place over the internet through the use Read this Term landscape. The yen used to be a relief valve for the US dollar US Dollar The US dollar, (symbol $, code USD) is the fiat currency of the United States of America (USD) and the most widely traded currency globally. It was introduced into the US in the late 18th Century, with paper notes not being distributed until the following century. The US dollar, also informally known as the greenback, is the world’s most foremost reserve currency, due in large part to the importance of the US economy on the world stage. Once backed by gold (in the 1900’s), the USD is now a purel The US dollar, (symbol $, code USD) is the fiat currency of the United States of America (USD) and the most widely traded currency globally. It was introduced into the US in the late 18th Century, with paper notes not being distributed until the following century. The US dollar, also informally known as the greenback, is the world’s most foremost reserve currency, due in large part to the importance of the US economy on the world stage. Once backed by gold (in the 1900’s), the USD is now a purel Read this Term at times of risk aversion but with the BOJ stridently committed to yield curve control, that market kneejerk reaction appears to be breaking.

The Reuters report touched on it:

The U.S. currency has also benefited from safe haven flows as weak Chinese data and a surprise rate cut by China’s central bank on Monday raise concerns about global growth.

The dollar has “supplanted the yen as the preferred safe haven in the fx market,” said Button.

That could be a lasting factor that will create a significant USD overshoot in the year ahead.