In the meantime, foreign direct investment for mergers and acquisitions has helped power the US currency higher. So far this year, about US$33 billion came from the 12 nations sharing the euro to buy US companies, compared with US$20 billion leaving the US for euro-zone purchases, for a US$13 billion net inflow. In 2000, a net US$134 billion came from euro-zone countries for acquisitions in the US.
Companies "have the freedom to come into the US and buy companies if they wish, so they do," rather than wade through prohibitive regulation in Europe, said Fortis's Thome.
While the dollar strengthened or remained unchanged against 52 of 55 major currencies, the euro has performed as well against just 11 and the yen against 17.
"It's only the US that's moving to head off the weakness in growth with progressive Fed easing in rate cuts" to such a degree, said Jay Bryson, an international economist at First Union Corp in Charlotte.
"The reason the dollar's been strong is that global investors have considerable faith in the ability of the Federal Reserve to deliver the goods" and get the economy back on track, said MacKinnon at Merrill Lynch. "Many investors take the view if the US is going to have a bumpy ride you can bet everyone else is too, and perhaps to a worse degree."
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