US dollar rally gained further momentum on Wednesday as global equity markets are losing investor’s confidence due to the threat of the second coronavirus wave. The risk of fresh economic and traveling restrictions has added to the greenback value.
The USD index, which tracks the greenback against the six major currencies, rose to the highest level in the last six weeks. The index is currently trading around 94.20 level.
The support for the reserve currency also came from robust US economic data. The US existing home sales grew 2.4% from the previous month in August to 6.00 million SAAR. This marks the highest level in more than a decade. August home sales grew 10% from the year-ago period.
“Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market,” said Lawrence Yun, NAR’s chief economist.
The selloff in European and Asian currencies also supported the US dollar. Euro and British Pound fell back against the greenback amid rising coronavirus infections across the region.
The UK prime minister announced to introduce new restrictions on pubs, bars, and restaurants in order to stop the virus spread. Countries like Spain and France are also planning to impose new travel restrictions. The World Health Organization warned that the situation is alarming in the European region.
Euro fell below $1.17 level for the first time in several months against the US dollar. The market analysts are expecting the common currency to drop to $1.15 level in the coming days on the strengthening dollar.
The European Central Bank also seeks to cool off the common currency to support exports and the tourism sector. Gold also lost $1900 level as the yellow metal traded around $1890 an ounce on Tuesday. Gold price is sensitive to the US dollar and stock markets.