Forex: US Dollar Hits New Low In 3 Months

0
188
US Dollar
US Dollar

The US dollar index dropped, hitting a new low in three months on Friday after strong Chinese economic data preferred commodity currencies instead of equity markets and safe havens continued its rally.

The US dollar dropped over 2.2% this month due to the surge in the sentiment of the global market following Joe Biden’s election victory with the positive coronavirus vaccine progress. This reduced the demand for the safe-haven currency.

The dollar of Australia hit a new high in September following news that industrial firms of China grew for six months straight in October and at its quickest pace from early 2017. This indicates a firm recovery of the sector of manufacturing after it had a bad time because of the coronavirus pandemic.

The English pound fell against the Euro as there are still significant differences between Britain and the EU over the trade deal of Brexit. The chief negotiator of the EU prepared to fly to London to avoid the bad ending to a Brexit crisis of five years in the last attempt.

Opinion Of Analysts On US Dollar

Along with Brexit headlines and China data, Erik Bregar, head, FX strategy, Exchange Bank(Canada) cited the end of the month selling of US dollars while investors try to balance their portfolios after sufficient gains in equities monthly.

There were talks of the US dollar seeing waves full of selling on Monday. The US dollar is also getting sold into London this week every day, reported Bregar.

US Dollar
US Dollar

The main indexes of Wall Street rose and Nasdaq made a high record due to optimism about the rebound of the economy outweighed the concerns regarding the expected surge of coronavirus infections after the Thanksgiving holiday on Thursday.

The markets tend to perhaps follow the fact of having a really bad Q4, and possibly a bad Q1 too, based on the economic data of the U.S. and Europe and look for better times in the future, mentioned Jane Foley, FX Strategist, Rabobank.

There are various indices of the stock market which are at all-time tops, so the U.S. dollar is under pressure. Also due to the dollar being under pressure, there is this perception of the Fed acting and forcing the yield curve far lower, if it needs to be if there is more delay over the Covid-19 fiscal package.

The latest meeting of the Federal Reserve gave the impression that policymakers should provide new guidance related to bond-buying soon.

US Dollar Vs Other Currencies

The dollar fell 0.24% against major currencies basket after it hit its new low from Sept. 1st. The dollar-yen fell by 0.16%.

The dollar of Australia, a liquid proxy risk hit its new high in three months at London training. It was at 0.7394 and up by 0.5%.

Victoria,second-largest Australian state, Australia’s Covid-19 hotspot is now without new infections for 28 days.

Sterling fell by 0.03% vis-a-vis the U.S. dollar and Euro gained by 0.26% vis-a-vis British currency.

The Euro went up 0.29% and settled at $1.1945.

Rabobank’s Foley indicated that Euro-Dollar can face a downside due to ECB’s signal about watching the euro appreciation. The budget of the EU including the coronavirus recovery fund is not getting approval.