US Dollar jump to weekly high on lockdowns, equities fell
US dollar jumped sharply in Wednesday trading as demand for safe-haven assets grew on the robust increase in virus infections along with the introduction of new business restrictions.
The USD index, which tracks the greenback against the six major currencies, hit 93.70 level in Wednesday trading before falling back to 93.60 level on Thursday. The significant gains have backed the selloff in equities and riskier currencies.
US dollar soar as investors favor safe-haven assets
The rally in the US dollar value is supported by the trader’s concerns over the introduction of new lockdown policies in the eurozone.
France has introduced complete lockdown as people are only allowed to go outside for essential items. France has reported 34,000 daily new cases on Wednesday. The country expects to extend the lockdown until the end of the next month.
The situation is similar in the United States. The world’s largest economy could suffer losses in the fourth quarter as daily virus infections jumped above 80,000 level this week.
Germany and the United Kingdom have introduced restrictions on bars, restaurants, gyms, and other businesses to stop the virus spread.
Riskier assets fell on lockdown policies
European and US stock markets reported big losses in Wednesday trading as investors reacted to lockdown policies. The social and economic restrictions could have a massive impact on the already struggling global economy in an analyst’s view.
Euro fell to one month low due to the introduction of lockdowns in the eurozone. EURUSD pair is trading in the range of $1.17 level. The analysts expect further downside for the euro amid prospects for slower economic growth.
“The currency markets right now are dealing with problems in Europe, and Europe – I don’t know if the market thinks they have a lot of bullets left to fire at this thing. From a quantitative easing standpoint, that’s what is going to come. You see the dollar being more attractive because maybe Trump won’t go in that direction,” said John Payne, senior futures and options broker, at Daniels Trading, in Chicago.