Dollar extended its rally as the pandemic threatens markets

united states Dollar extended its rally

The U.S. dollar was steady against most currencies on Thursday. Signs of an economic slowdown in the United States and in Europe bolstered concerns about the fallout from the second wave of Covid-19 infections.


The greenback will probably continue to rise as another spike in virus cases in Europe boosts its safe-haven appeal. The Federal Reserve policymakers have already asked the U.S. government to provide more fiscal support.


Yukio Ishizuki, the foreign exchange strategist at Daiwa Securities, stated that risk is being sold across the board, and there is a big unwinding of dollar shorts. The strategist was referring to investors abandoning bearish dollar bets.


The U.S. currency traded at $1.1656 per euro on Thursday, near to two-month high reached on Wednesday. The greenback hovered to a nine-week high against the Swiss franc at 0.9236. It also held on to gains made in the previous session versus the Japanese currency, trading at 105.45 yen. The British pound bought $1.2705, almost to its weakest level against the greenback since late July.


Overall, the dollar has rallied during this week as rising coronavirus cases in Europe and Britain undermined traders’ optimism about vaccine progress.


How did other currencies fare?


The euro faces an additional hurdle later on Thursday with the release of data on German business sentiment. The Ifo survey is due later today. According to forecasts, it may show an improvement in business morale in Germany.


Nonetheless, sentiment for the euro has suffered a big blow after surveys released on Wednesday. They showed that new restrictions pushed the euro zone’s services industry into reverse.


Meanwhile, Asian trading was more subdued. The yuan was steady at 6.8145 per dollar in the onshore market.


Some traders are watching the Australian and New Zealand dollars. They have come under pressure on expectations their central banks could deliver more monetary stimulus.


The Aussie tumbled down by 0.45% to $0.7042, while the kiwi dropped by 0.3% to $0.6529, adding to a 1.3% loss in the previous session.

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