The U.S dollar pulled back some of its gains recorded previously on Thursday morning as global investors retreated from the safe-haven currency.
The U.S. Dollar Index that monitors the American dollar against a group of other major currencies lost 0.11% to 97.040 at 5.49 am Nigerian time with an appetite for risk increases, as Global stocks continued to rally leading currency traders and investors retreating from the U.S dollar
Quick fact; The U.S. Dollar Index that tracks the American dollar against a basket of other major currencies (like the Japanese yen, British pound sterling, Swedish Krona, Euro), Individuals hoping to meet foreign exchange payment obligations, via dollar transactions to countries like Europe, and Japan, would need to pay more dollars to fulfill such transactions.
Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics, wrote about the present market volatility in the currency market. He said;
“If you are handling the currency hot seat these days, you likely feel tethered to the end of a very reactive Yo-Yo string as currency moves in one session are faded in the next.
“Currencies have started the second half of the year, where they left off in the first and outside of the “risk-on risk-off” see-saw currency appetite struggled to find any meaningful catalysts.
“With G-10 central banks at zero or below, in the absence of any significant monetary policy transmission that leaves currency traders chasing or instead guessing which countries activity data will outperform the others, which is getting enveloped around the dichotomy between current buoyant conditions and subdued future expectations striking both in consumer sentiment and in financial-market indicators.”
However, some global investors and currency traders are predicting futuristic gains for the greenback with the resurgence of the COVID-19 cases globally. There were over 10.6 million cases as of July 2, according to Johns Hopkins University data.
“If we see further spikes in coronavirus cases, I would expect both the dollar and the yen to strengthen against other currencies,” Tohru Sasaki, head of Japan market research at J.P. Morgan, told Reuters.