Leading academics and index experts examine how investors should handle the falling dollar.

The Death Of The Dollar?, the November/December 2009 issue of the Journal Of Indexes, focuses on currency and related strategies, with contributions from Invesco PowerShares' Bruce Bond, the International Securities Exchange's Steve Meizinger and Marc Chandler and Jeffrey McCarthy of Brown Brothers Harriman, not to mention a currency primer by Index Publications' own Dave Nadig, Matt Hougan and Lara Crigger.

Other articles in the publication include a look at how EMH weathered the financial crisis of 2008 by David Blitzer, the first installment of a three-part series on improving fund evaluation techniques by Gary Gastineau and a study from David Blanchett on how to figure out the "passive" portion of an actively managed portfolio. And let's not forget the ETF crossword puzzle on the back page!

You can view the entire issue

The yen rose across the board on Friday as a pullback in Wall Street shares and a drop in oil prices negated upbeat U.S. consumer sentiment, rekindling safe-haven demand for the Japanese currency.

The dollar slipped against a basket of currencies, touching a nearly one-year low earlier, as the sell-off continued, on track for its worst weekly performance in more than three months. The greenback also fell to a fresh 2009 low versus the euro, but it recouped most of its losses.

The prospects for economic recovery and low U.S. borrowing rates continued to encourage investors to move cash out of the dollar into riskier assets in other currencies.

“Today we’re getting a little bit more action versus the yen and weaker U.S. stocks are helping,” said Patrick Brodie, chief FX dealer at Sumitomo Mitsui Banking Corp in New York.

The yen typically benefits when there is heightened risk aversion in the market.

“In the

In the currency market, the dollar moved lower against the euro. Late Friday, the euro was trading at $1.4215 vs. $1.4194 on Thursday. MarketWatch reported that the dollar lost ground to the euro after closely watched surveys indicated the 16-nation eurozone partially braked a fall in output in July.

The Munich-based Ifo Institute’s July German business climate index rose for the fourth-consecutive month in July, posting a reading of 87.3. Economists had forecast a rise to 86.5 from 85.9 in June.

Also, the preliminary Markit euro-zone composite purchasing managers’ index for July increased more than forecast.

The euro saw a modest jump versus the dollar after the data.

“All positive, but let’s not get carried away,” wrote strategists at Brown Brothers Harriman. “Germany’s Ifo index … is on the rise … but remains very low on a historical basis and Germany’s economy is still on track to contract by at least 5% this

Gold jumped up about midway through trading in the Far East and continued its rise through London and the Comex open to an intraday high just north of $955. But at around 10 a.m. in New York the yellow metal got knocked down below $950 where it stayed through the Globex close, finishing at $949.10/oz., up $11.40. Overnight, gold is little changed.

Platinum experienced a sharp sell-off late in Hong Kong, but clawed its way back to post a decent gain for the day, closing at $1181/oz., up $9. Overnight, platinum is slightly higher.

Silver made big gains through Hong Kong and early London trading that were far too substantial to get wiped out by the 10 a.m. sell-off in New York, after which it remained range-bound between $13.60 and $13.65 and closed near the middle at $13.63/oz., up 22 cents. Overnight, silver is trending lower. (Click here for

In the currency market, the dollar was marginally lower against the euro. Late Monday, the euro was trading at $1.4078 vs. $1.4068 on Friday.

“The U.S. dollar has started the week a touch firmer, with renewed concerns over the global recovery helping the greenback ahead of a busy week” of economic data, wrote strategists at Brown Brothers Harriman.

With the July 4th weekend ahead, the Labor Department will release the closely-watched tally of non-farm payroll losses a day early, on Thursday. Economists are projecting a net loss of about 325,000 jobs in June. Any strong variance from that figure is likely to have repercussions.

But if there are further indications that the ‘green shoots’ scenario is correct, will that necessarily have a positive effect on the buck? Many doubt it, even though a strengthening economy should portend a stronger greenback.

However, “The past seven years have proven each time U.S. data emerged on

In the currency market, the dollar lost ground to the euro. Late Thursday, the euro was trading at $1.3991 vs. $1.3926 on Wednesday.

“Equity and commodity markets advanced, encouraging rotation out of the greenback,” said analysts at Action Economics.

Also noted was that, “The dollar has been driven over the last two days by central bank activity. One is the Swiss National Bank, which appears to be continuing its buying of dollars,” said Meg Browne, a currency analyst at Brown Brothers Harriman.

The Swiss National Bank is publicly committed to stemming any haven-related appreciation in the franc, but as to what it may be doing, said that it doesn’t comment on intervention rumors.

However, the franc’s strength has proven “increasingly self-sustaining,” says Ashraf Laidi, chief market strategist at CMC Markets in New York. It has attracted support because of “broadening risk aversion, short-lived dollar strength and emerging doubts” about euro-zone banks,” Laidi said.

The

In the currency market, the dollar slipped against the euro. Late Friday, the euro was trading at $1.3952 vs. $1.3889 on Thursday.

Analysts surmised that rising global equity markets indicated an expanded willingness among investors to take a flyer with riskier assets.

But no clear trend appears to be developing.

“While sentiment appears to remain mostly dollar negative, the inability of the euro to establish a convincing foothold above $1.40 disappoints the dollar bears,” said analyst at Brown Brothers Harriman. “The euro appears stuck in the $1.3750-$1.4050 trading range.”

With no major economic numbers coming from either the euro zone or U.S. yesterday, investors were beginning to shift their attention to next week’s meeting of the Federal Reserve’s policy-setting Federal Open Market Committee.

“The Fed is likely to sound more upbeat on growth prospects than it did in its April statement,” wrote Steven Englander, of Barclays Capital.

Englander believes that policy makers will also likely

In the currency market, the dollar prolonged its freefall against the euro. Late Friday, the euro was trading at $1.3996 vs. $1.3904 on Thursday.

The buck fell to its lowest level vs. the euro since December, as the flight to the greenback continues to wane.

“We’ve turned to a more dollar-bearish environment,” said Nic Pifer, of RiverSource Investments. “As markets start to loosen up again and risk appetite comes back into vogue — in high-yield debt, emerging markets and equities — that safe-haven demand for the dollar has dissipated.”

The dollar may be stuck between a rock and a hard place. “In the near term, the stars are aligned against the U.S. dollar,” wrote foreign exchange strategists at Brown Brothers Harriman.

“If the news stream is good,” they wrote, “we are told investors are less risk averse and do not need the dollar’s security. If the news stream is poor, we are told

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In the currency market, the dollar rose against the euro. Late Wednesday, the euro was trading at $1.3597 vs. $1.3644 on Tuesday. Analysts saw the buck benefiting from a flow back into the pre-eminent currency safe haven.

The day’s most significant hard number came from the Commerce Department, which reported that retail sales pulled back again in April, dropping a seasonally adjusted 0.4%, the eighth decline in the past 10 months and 9.4% lower year-over-year.

That surprised economists, who were forecasting a small rise in sales. “The dollar gained across the board in North American trading after weaker than expected U.S. retail sales called the ‘green shoots’ thesis into question,” wrote strategists at Brown Brothers Harriman. “This tug of war is likely to continue” for much of the second and third quarter, they said.

“There is no momentum in spending,” wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics. “The freefall