The U.S dollar index has been on the defensive, staying above a key support level of 97.400. This follows comments by America’s Federal Reserve Chair, Jerome Powell, who during an interview yesterday, explained that the outlook for the world’s most powerful economy is “extraordinarily uncertain” and will depend both on containing the coronavirus pandemic, and on government economic support.
The U.S dollar index, used to gauge the strength of the U.S dollar against a bouquet of major currencies, was down marginally at 0.07% to trade at 97.435, 3.39 am local time.
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.
However, Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note sent to Nairametrics explained the optimism that currency traders are having about the U.S dollar, as the U.S economy keeps printing impressive data. He said:
“But with US data printing well above expectations, US dollar bulls are not giving the plot up quickly US exceptionalism continues to resonate in the latest run of market-beating US economic data.”
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Fresh optimism on the U.S. economy came from the U.S home sales data, which showed that housing market activity had rebounded in May from a previous steep fall triggered by the COVID-19 pandemic.