The U.S dollar remained firm at the last trading session of the week. Despite a significant improvement in risk appetite across global financial markets, investors are flocking into the safe-haven currency, as COVID-19 remains a major headache.
What you should know: The dollar index, at the time of drafting this report, was up by 0.15% to trade at 90.662 at Friday’s early session in London.
The U.S dollar index is on track for a 0.5% weekly gain, following record buying at the start of the week amid concerns that President Joe Biden’s fiscal spending package will not be as large as earlier anticipated.
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Quick fact
- The U.S. Dollar Index tracks the American dollar against a basket of other major currencies (like the Japanese yen, British pound sterling, Swedish Krona, and Euro).
- Individuals hoping to meet foreign exchange payment obligations via dollar transactions to countries like Europe, and Japan, would need to pay fewer dollars in meeting such obligations.
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Stephen Innes, Chief Global Market Strategist at Axi, gave critical insights to macros affecting the U.S dollar’s arch-rivals.
“A sharp sell-off in iron ore prices is a worrisome development for commodity linkers, more so Latin American producer and their currencies. China tightens bleeds into Asia risk assets like iron ore.
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“GBP is not showing the kind of sensitivity to risk. The lack of drama in much of the FX market may reflect a view that equity market tribulations are stock-specific VAR-styled sell-offs in nature rather than a reflection of global risk themes that would carry significant bond or cross-asset leakage.”
