On Thursday, the US Dollar stepped down to its lowest level in two years, as market participants’ worries over a reversal in the course of US economic recovery following reveal of another dose of dour economic data earlier in the day had been escalated.
On top of that, a strident rise in pandemic cases alongside concerns over a second leg of forced business shutdown had been forcing the investors to seek safety on safe-haven assets such as gold and to continue to sell off the greenback while the US lawmakers had been engaged in a wrangle in the Capitol Hill over an extension of the additional $600 weekly pandemic relief aid for each American adult.
US Dollar slumped to two-year lows as euro surges to 21-month peak
On the contrary to the US Dollar’s downcast, the eurozone’s common currency euro had hit its highest level since early October 2018 on Thursday after surging past the technically pivotal $1.16 level a day earlier, while the bloc’s single currency had also extended its gains against its American peer for the fifth straight session in a row, still shining on the scintillating €750 billion EU pandemic relief bill sanctioned earlier this week.
Citing statistics, as the US initial jobless claims rose for the first time last week in three months and a half, the US Dollar Index (DXY) measured against a basket of six major currencies had been trading 0.30 per cent lower to 94.72 in the late-afternoon hours after hitting its lowest level since late September 2018 earlier in the session.
Besides, as the US Dollar had shrugged off over 8 per cent since mid-March, the euro had been 0.34 per cent up at $1.1609 against its American peer during late-afternoon US trading hours, while the American currency faltered 0.46 per cent against the safe-haven Swiss Franc to $0.9252 and 0.37 per cent against the Japanese Yen to 106.75 yen per dollar.
Nonetheless, the Aussies retreated from a 15-month peak and ended the day down by 0.46 per cent to $0.7107 against its American peer, while the Kiwis curbed out 0.41 per cent to wrap up the day at $0.6636. Meanwhile, referring to a roaring US equity market which might just have shrined the US Dollar for the moment being, a currency strategist at Wells Fargo Securities in New York, Erik Nelson said, “Speculators are pretty underweight a lot of the G10 currencies so there is room for this momentum move to keep going.
The biggest risk that it stops and the dollar starts to regain its legs is equities, if the equity rally really starts to falter and we see a big move lower then all of a sudden dollar strength is going to come back very quickly. ”