The dollar index’s rebound from three-year lows began last week
Currency markets turned risk-averse on Friday, with the dollar on track for its biggest weekly gain since November 2020 and analysts predicting further short-term strength as rising coronavirus infections limit risk appetite.
The dollar index’s rebound from three-year lows began last week. It picked up as European markets opened on Friday, having slowed overnight after U.S. Federal Reserve Chair Jerome Powell said “now is not the time” to be talking about changing the Fed’s asset purchases.
President-elect Biden laid out his $1.9 trillion stimulus package proposal on Thursday, but analysts said that the market impact was limited by uncertainty over how easily Democrats will be able to get their proposals through the Senate.
The reality is that while the Democrats now have increased power having won the run-off elections in Georgia last week, that power still has its limits, MUFG currency strategist Derek Halpenny wrote in a note to clients.
While short-term, the U.S. dollar could extend further, the big-picture backdrop for the dollar remains negative, he added.
The dollar index was at 90.407 versus a basket of currencies, up 0.2% on the day. It was set for a weekly gain of around 0.4%, making this its strongest week since November.
Against a stronger dollar, the euro was down 0.2% at $1.21325.
Rising coronavirus infections also curbed risk appetite, as daily cases in China hit their highest in more than 10 months.
France will tighten its COVID-19 border controls and bring its curfew forward by two hours, while German Chancellor Angela Merkel said she wanted “very fast action” to counter the spread of virus variants after Germany had a record number of deaths.
The articles are for information purposes only and Precise Investors shall not be held responsible for any errors, omissions or inaccuracies within it. Any rules or regulations mentioned within the website are those relevant at the time of publication and may not be the most up-to-date.
Precise Investors does not endorse any of the products or services that appear on it or are linked to it and are not liable for any action that you may take as a result of the content of this website, or losses or damage you may incur doing so.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.
Please remember that investments of any type may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.