On Friday, the American Dollar Index (DXY) measured against a basket of six major currencies on an average, gained across the board, closing out the week at a four-week high as a deluge of dismal US economic data released throughout the week appeared to have dampened appetites for riskier assets, while a persistent rise in pandemic cases alongside a renewed lockdown measure in China stoked worries over an earlier-than-anticipated economic recovery from the pandemic associated fiscal slump.
In point of fact, the day’s gains of US Dollar Index (DXY) was almost entirely prodded by a downbeat US retail sales data, while a sharp uptick in initial jobless claims last week seemed to be taking a greater toll on investors’ morale, eventually petering out appetites for riskier currencies and commodities.
Apart from that, US Commerce Department said earlier in the day that the US retail sales plunged 0.7 per cent in December following a 1.4 per cent decline a month earlier, while a day earlier, the US Labour Department said in a statement that the US weekly initial claims for state unemployment benefits soared to a nearly four-month high of 965,000 over the week that ended on January 9, depicting a sharply weakening US labour market that bolstered a safe-haven bid further for the American Dollar.
Concomitantly, a persistent rise in pandemic cases in the United States alongside a renewed lockdown measure in China, added to further concerns.
US Dollar ends higher as bleak economic data depreciate risk-appetites
Citing statistics, in the day’s FX market round off, the US Dollar Index (DXY) measured against a basket of six major currencies on an average, ended up the day 0.56 per cent higher to 90.77, while on the week, the greenback added 0.8 per cent, its best weekly percentage gain in more than 11 weeks.
Besides, the bloc’s common currency euro shed 0.64 per cent to $1.2074 against its American counterpart, while the British Pound pummelled 0.77 per cent to $1.3580. Elsewhere, Australian Dollar, the most-timely indicator for market risks, shrugged off 0.96 per cent against its American peer to $0.7700, while safe-haven Swiss Franc faltered 0.26 per cent to wind down the day at $0.8899.
Meanwhile, referring to pandemic associated worries which seemingly had stepped up a safe-haven bid for the American currency, a senior FX analyst at Tempus Inc in Washington, Juan Perez said, “I feel that after all the optimism regarding vaccines, we are now living the reality of a very slow (vaccine) rollout, which is weighing heavily on business activity.
Until we have more guarantees on the medical front, markets will not continue to flourish despite whatever financial aid may be on the way”.