Dollar Index Steady as Investors Seek Risk Aversion

Dollar Index Steady as Investors Seek Risk Aversion - Wibest Broker

On Wednesday, the dollar index holds its gains against a basket of currency from the previous session. The steady gains were due to fears over the escalating trade war of the United States and China. Aside from that, investors resorted in safe-haven assets.

Also, the weakness of the euro helped in building the greenback. Concerns over the outlook for the euro area’s economy and political future pressed down the single currency.

Aside from that, the dollar index was almost firm at 97.820 against the six-currency basket, rising 0.3% overnight. Then on Thursday, the dollar index trades around 0.5% off a two-year high of 98.371. But the index is still up 1.8% for this year.

Currently, investors’ attention is all in the ongoing U.S.-China trade war. And China is preparing to get back with the U.S. by using rare piles of earth. But this move can further increase tension between the two largest economies of the world.

In addition to that, the surging demands for U.S. Treasuries were due to the boosting risk aversion of investors. Also, yields on 10-year Treasuries hit the lowest levels since September 2017.

Meanwhile, the euro held firm at 1.1162 after closing the previous session losing almost 0.3%. And last Thursday, it hits the two-year low of 1.1105.

EU Posts

Meanwhile, the European Union leaders started the process of filling the top EU posts. It will begin from the head of the European Commission to the European Central Bank.

Then the Twidale of Rakuten stated, “The euro drop off is because the European zone, in particular, has been threatened by and troubled by the trade concerns.”

However, the dollar was a little lower against the yen and the Swiss franc at 109.23 and 1.0063. Furthermore, the yen and Swiss are traditionally known as safe haven currencies. As a result, they tend to draw demand when geopolitical or financial faces stress.

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  1. Avatar Kristyn Rostad February 26, 2021
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