US Dollar gains extended into the seven-session in a row as coronavirus infections have been steadily declining over the past month. In addition, strong economic data from all over the world is adding to investor’s sentiments. Some investors blame the selloff in British Pound and Euro value for the US dollar upside.
USD index jumped to four months high of 93.5 levels after seven days of gains. However, the upside momentum is unsustainable in the bear’s views. This is because of trade wars, uncertainty related to the November elections, and growing national debt.
“Renewed uncertainty around the seemingly never-ending Brexit process has sent sterling tumbling this week, and probably weighed a bit on European currencies more generally, given that a disorderly end to the UK’s transition period would be disruptive for the rest of Europe too,” said Jonas Goltermann, senior economist at Capital Economics.
The US stock market selloff has also pushed investors towards the US dollar. Wall Street plunged sharply on Tuesday as the tech-heavy Nasdaq index fell into correction territory.
The euro plunged to the lowest level in the last two weeks against the US dollar. The Euro is now around $1.17 level. The investors are aggressively waiting for the European Central Bank’s post-summer meeting, which is likely to set a new trend for the common currency.
On the positive side, the latest data highlighted that the Eurozone economy dropped at a lower rate than expectations. The bloc’s economy shrank 11.8% in the latest quarter compared to expectations for the drop of 14.7%.
However, Eurozone exports fell sharply last month. The Bureau of Statistics reported that Germany’s exports increased 4.7% in July compared to 14.9% growth in the past month. Gold price fell more than 2% on Tuesday due to the US dollar rally and stock market selloff.