The dollar has stabilized as the euro-region debt crisis worsened, forcing Greece to seek a second bailout in little more than a year from the European Union and the IMF, stirring speculation that Portugal and Ireland may follow.
The Dollar Index, which IntercontinentalExchange Inc. uses to track the currency against those of six trading partners, rose in four of the past five weeks as the German government and the European Central Bank debated how best to ward off a Greek default and investors fled riskier assets.
EU leaders are pushing banks and insurance companies who hold Greek bonds to contribute to a new aid package after last year's 110 billion-euro ($157 billion) rescue failed to stop the region's debt crisis from spreading.
The threat of contagion has sparked a surge in the cost of insuring against Spanish and Italian defaults, while yields on Irish two- and 10-year securities rose to records last week amid speculation the economy, once referred to as the Celtic Tiger, will also have its debt rating cut to below investment grade.
Earnings Growth
Earnings growth is also rebounding in the U.S., albeit at a slower pace. Companies in the Standard & Poor's 500 Index are poised to boost income by 19 percent in 2011, including a 13 percent advance in the second quarter, according to analyst estimates compiled by Bloomberg.
The gain will push profits back in line with their average increase of 6.9 percent over the last 51 years, data compiled by Brockhouse & Cooper Inc. and Bloomberg show.
"Our central scenario is that the U.S. dollar is bouncing along the bottom," said Richard Grace, chief currency strategist and head of international economics in Sydney at Commonwealth Bank of Australia, the ninth-best forecaster.
Concern the U.S. economy will falter and a growing debt load may hurt the dollar.
Data from the Labor Department in Washington on July 8 showed employers added jobs in June at the slowest pace in nine months. Payrolls rose by 18,000, less than the 105,000 jobs forecast in a Bloomberg survey of economists.