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Dollar near one-week low as Delta fears ease before Jackson Hole

The safe-haven dollar traded close to a one-week low versus major peers on Wednesday amid easing concerns that the highly contagious Delta coronavirus variant could derail a global economic recovery.

The dollar index, which tracks the currency against six rivals, edged up 0.07% to 92.981, after dipping to 92.804 the previous day for the first time since Aug. 17.

The greenback had rallied until the start of this week, with the dollar index hitting a 9 1/2-month high of 93.734 on Friday, not just on fear about Delta’s economic impact, but also as the Federal Reserve signalled a tapering of stimulus was likely this year.

However, with Delta clouding the outlook, expectations have diminished that Fed Chair Jerome Powell will indicate a timeline when he speaks at the Fed’s annual economic symposium at Jackson Hole, Wyoming, on Friday.

The dollar was little changed at 109.695 yen, another safe-haven currency, near the middle of the trading range since early July.

Against the euro, the dollar added about 0.1% to $1.17425, but remained close to the one-week low of $1.17655 touched overnight.

Sterling inched 0.05% lower, after rising as high as $1.37475 on Tuesday for the first time since Nov. 19.

Yuan eases as Fed, PBOC policies set to diverge

The People's Bank of China (PBOC) set the midpoint rate at 6.4728 per dollar prior to the market open, 77 pips firmer than the previous fix of 6.4805, but a tad weaker than Reuters estimate of 6.4697.

The South Korean won is one of the worst performing

Currencies in Asia this year, depreciating nearly 7% against the dollar so far as foreign investors pulled out funds.

Thai baht was at its strongest in a month.

"The THB (Thai baht) is the stand out here on suggestions that it may relax its movement restrictions and learn to live with the virus," Robert Carnell, analyst at ING, said in a note.

"But with low levels of vaccination, and still high cases and death rates... doubt even vaccinated tourists will be rushing to the beaches of Thailand anytime soon just because they open their borders," the note added.

Reference: Reuters