US Dollar ends five-week winning streak as risk-sentiment rebounds

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US Dollar ends five-week winning streak as risk-sentiment rebounds

On Friday, the American Dollar fell against most major and emerging market currencies and rounded off the week in red inks, snapping a five-week long winning streak, as a sharp bounce back in risk appetite had prompted FX traders to lower US Dollar volumes from their portfolios, while even an increase in US Treasury Yields had botched to ramp up the greenback’s safe-haven bid.

On top of that, an insurgence in global equity markets this week with stocks rallying across the board following ease of frets related to a steep stagnation in global economy, led to a downward spiral in US Dollar Index (DXY) further.

Adding further impetus for riskier assets, US Commerce Department data had unveiled on Friday that US retail sales gained 0.7 per cent in September, insanely beating an analysts’ estimate of a decline of 0.2 per cent.

In tandem, the President Joe Biden had said in a statement later last week that the US would lift international travel ban for vaccinated travellers from November 9, eventually ramping up bets on riskier assets over prospects of an increase in transactions of other major and emerging market currencies.

Besides, a soaring crude oil prices amid a steeper-than-anticipated energy crisis across the globe had pressed the US Dollar further, while a 19-month low weekly initial jobless claims in September from the US Labour Department had eclipsed concerns over a sluggish economic growth in Q3, 2021.

US Dollar edges lower as risk-appetite roars back

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 edged 0.1 per cent lower to 93.91 after hitting a one-year peak of 94.53 on Tuesday.

On the week, the greenback reported a percentage decline of around 0.2 per cent. Besides, British pound gained 0.57 per cent to $1.3765, the strongest level since September 17, while the bloc’s common currency euro edged 0.03 per cent lower to $1.1595 against its American counterpart.

Australian Dollar ended 0.02 per cent higher to $0.7417, while the Kiwis soared as much as 0.54 per cent to $0.7468. Safe-haven Japanese Yuan lost around 0.4 per cent to 114.25 yen per US Dollar. Meanwhile, addressing to an upscaled risk-appetite across money markets, a managing director of FX Strategy at BK Asset Management, Boris Schlossberg said, “The risk appetite here remains really, really strong for the time being.

That's helping the high beta currencies like the pound, the euro and the Aussie, simply because the market is feeling much more positive”.