US Dollar Recover Losses amid Bearish Sentiments for Riskier Assets
US Dollar bounced back as investor’s concerns over the second coronavirus wave have lowered the focus towards the riskier assets. The fading hopes on the stimulus package have also negatively impacted riskier assets in the past few days.
The US dollar index, which tracks the US dollar against the basket of six major currencies, bounced back to the 92.90 level after plunging to the 92.40 mark last week. Although the index is still trading below the 93 thresholds, the analysts are expecting more gains for the greenback in the days ahead.
More Upside is Likely for the US Dollar
US dollar is likely to perform well in the coming days amid the substantial increase in coronavirus infections all over the world. The governments are enforcing new social distancing policies and lockdowns to avoid the virus spread.
France has reported 52000 daily virus infections while the virus infections jumped to a new record level of 84000 in the United States. The UK has reported 35000 new infections on Friday. The robust growth in virus infection could also kill the economic recovery and employment rate in the days ahead.
“The government has told us to expect a tough winter and while local lockdowns are necessary to protect lives, it is vital that ministers continue to listen and reassess the level of support given to help people and places to cope with the months ahead,” Andrew Carter, chief executive of Centre for Cities, said.
The London School has warned that an estimated 6m small businesses that are supporting 16.6 million jobs are in poor financial condition due to the pandemic.
Euro Struggles but Sterling Remains Firm
The rebound in the greenback value has dropped EURUSD pair to around $1.18 level. The euro is likely to struggle as investors are moving away from riskier currencies. Meanwhile, the British Pound remained strong amid prospects over a trade deal between the UK and the European Union.