The U.S. dollar was in a stable position on August 24, near the previous session’s five-day low, as markets appeared less concerned about the spread of the Delta coronavirus variant. On Tuesday, risk-sensitive currencies benefited from rising commodity prices.
Risk appetite in global markets rose following the Food and Drug Administration’s decision. The U.S. agency granted full approval to the Covid-19 vaccine developed by Pfizer as well as BioNTech. The Food and Drug Administration’s decision could accelerate inoculations in the U.S. A bounce in China’s technology sector also influenced market sentiment.
Countries around the globe are struggling to deal with the highly contagious Delta coronavirus variants. Rising Covid-19 infections triggered concerns about the recovery from the global health crisis. But markets have largely ignored that factor this week, with analysts citing thin liquidity as a factor driving apparent swings in risk appetite.
Dollar and risk factors
At 11:31 GMT the dollar index stood at 92.998. The index dropped to a five-day low of 92.947 on Monday, registering its largest one-day drop since May.
On Tuesday, the euro was down about 0.1% against the greenback at $1.17385.
Analysts, as well as investors, are closely monitoring the Federal Reserve’s annual conference. Some investors expect the Fed to give clues on a possible timeline for tapering of monetary stimulus. Strategists who work for ING think that it is better to hear on this subject from Jerome Powel before making any decisions. Nevertheless, the market reaction may be limited because Powell’s speech is on Friday afternoon in European time.
Investors are also monitoring issues created by the pandemic. Outbreaks in the world’s second-largest economy appear to be coming under control. The situation is more complicated in New Zealand. The country’s government is trying to contain the Delta variants.
Still, the New Zealand dollar was up 0.8% and stood at $0.6946, its highest point in a week. Comments from the central bank’s assistant governor helped to boost the New Zealand dollar.
The Australian dollar gained 0.4% to $0.72425.
The Norwegian krone gained 0.6% against the euro, with the pair changing hands at 10.4053. The Canadian dollar rose 0.2% against the U.S. dollar.