The U.S dollar remained firm on Friday morning at London’s trading session holding most of it gains recorded on Thursday amid strengthening concerns over the surge in COVID-19 caseloads in major economies around the world, which include China and United States.
The U.S. Dollar Index, used to gauge the greenback against a bouquet of other currencies, remained firm at 97.35.
Why tracking the U.S dollar Index helps: Individuals hoping to meet foreign exchange payment obligations, and process transactions via the dollar to countries like England, France, or Japan, will need to pay fewer dollars for such transactions.
The American Dollar Index tracks the dollar’s strength relatively against a bouquet of other major currencies around the world, such as Japanese yen, Euro, British pounds sterling, Swedish krona, Canadian dollar, Swiss Franc, etc.
China reported 21 new COVID-19 cases connected to an outbreak at the Xinfadi market on Wednesday, while in Texas, US, there was a surge in reported cases in hospitals.
The resurgence of COVID-19 cases showed a troubling trend as the number of cases in both major economies, triggered global investors concerns about the global economy.
This boosted confidence that the safe-haven currency would remain bullish, as some global investors, and currency traders remained optimistic about the dollar, despite its recent pullbacks.
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“Upside for U.S. stocks and other risk assets has dwindled because more people are talking about the second wave of virus infections…this supports the dollar and the yen because they are both safe havens,” Junichi Ishikawa, senior foreign exchange strategist at IG Securities, told CNBC.