On Friday, the American currency rose across the board and reported solid gains against safe-haven assets such as Japanese Yen and Swiss Franc, as a deluge of dour economic projections from the US Federal Reserve alongside frets of a second wave of pandemic outbreak in the United States had revived safe-haven bid for the US Dollar, while euro fell against the greenback to $1.1228 from its nearly three-month peak of $1.1422 reached on Wednesday.
In point of fact, Friday’s rally of the American currency, which was in alignment with a broad-based bounce-back of the US stocks, was almost entirely galvanized by a revival of Dollar’s safe-haven bid ahead of a week full of Central Banks’ policy meetings, while investors’ uncertainties appeared to be taking a heavier toll over a number of key events scheduled to take place next week including discussions over EU recovery fund, BoE (Bank of England) and Swedish National Bank policy meetings alongside Fed Chair Powell’s semi-annual testimony to the Senate Banking Committee.
Bearish outlook on board for US Dollar as Fed caution back on forefront
Citing statistics, on Friday’s FX market, the US Dollar Index (DXY) measured against a basket of six major currencies, climbed as much as 0.5 per cent to 97.33 after hitting a one-week high earlier in the Asian trading hours, while the American currency soared 0.6 per and 1.2 per cent against the safe-haven Yen and Swiss Franc respectively to 107.45 yen and $0.9551 franc.
Aside from that, the bloc’s single currency fell 0.6 per cent to $1.1228 against its American counterpart and the pound sterling was plunged 0.9 per cent to $1.2487. Meanwhile, citing a downcast tenure for the US Dollar in a medium- to long-term outlook as hinted by the US Fed Chair Jerome Powell, a Senior Market Analyst at Western Union Business Solutions in Washington, Joe Manimbo said on Friday, “There has been a paring back of bearish bets on the dollar.
The Fed catalysed that with its cautious outlook this week and now the market is looking ahead to next week where it will be really full of Fed speak, especially the Fed chairman testifying on Capitol Hill so Fed caution back at the forefront, that has helped the dollar stabilize. ”