Dollar jumps as stocks tumble; rising COVID-19 cases dent risk appetite
The U.S. dollar index soared on Monday and riskier currencies fell as investors looked for safety while stock markets around the world tumbled on fears of the economic implications of rising COVID-19 cases
The euro and the Australian dollar fell against the greenback, and equities on Wall Street followed Asian and European stock markets lower, as the threat of new pandemic-related lockdowns prompted concerns about the global recovery.
U.S. investors fretted about the ability of U.S. Congress to reach an agreement for more fiscal stimulus.
“What we’re seeing here this morning for the dollar is largely a risk-off safe haven bid,” said Erik Bregar, head of FX strategy at Exchange Bank of Canada in Toronto, adding that the trigger was in the European morning on rising fears of a new U.K. nationwide lockdown.
“It’s scary stuff that reminds you of March,” he said.
The dollar - subdued during Asian hours - perked up in London trade as European stocks sank to two-week lows and U.S. stock futures fell.
The index that measures the greenback against a basket of peer currencies was last up 0.64% at 93.555.
The greenback also managed to bounce back from a six-month low to turn flat against Japan’s yen, which last traded at 104.56 against the dollar after earlier hitting 104.00, which was its lowest point since March 12.
Fed Chairman Jerome Powell is due to appear before Congressional committees, while Fed committee members Lael Brainard, Charles Evans, Raphael Bostic, James Bullard, Mary Daly and John Williams are also making public speeches.
“If Jerome Powell and the rest of the Fed speakers don’t really add more meat to the Fed plans for how it’s going to reach an average 2% inflation I could see the U.S. dollar trading even higher this week,” said Bregar at Exchange Bank of Canada.
The euro traded 0.8% lower than the dollar at $1.1743 . Sterling also fell 0.9% to trade at $1.28 as the dollar gained steam.
Reference: CNBC
Thai
Eng