Dollar Continues To Rise On Safe-haven Demand
The U.S. dollar firmed up against most of its peers on Wednesday, extending gains to another session, on increased safe-haven appeal following continued surge in coronavirus cases in Europe and several other countries across the world.
Federal Reserve Chair Jerome Powell, continuing to testify before Congress for the second day, said the U.S. Congress and the Federal Reserve both need to “stay with it” in working to bolster the economic recovery.
Despite progress in rebounding from the coronavirus economic downturn, “there is a long way to go,” with millions still jobless compared to where the economy was in February, he said.
“We need to stay with it … The recovery will go faster if there is support coming both from Congress and the Fed,” Powell said.
Meanwhile, with the elections looming, it looks increasingly unlikely that the lawmakers will reach an agreement on a new coronavirus relief bill anytime soon.
The dollar index rose to 94.43 in late afternoon trades, and is currently at 94.40, up 0.44% from previous close.
Against the Euro, the dollar firmed up to $1.1661, gaining about 0.4%. Data from IHS Markit showed the euro area private sector stagnated in September. Encouraging France factory data aided sentiment a bit.
The euro area composite output index declined to 50.1 in September from 51.9 in August. Economists had forecast the reading to drop to 51.7.
Manufacturing output growth accelerated in September to the fastest since February 2018, while services recorded the largest contraction of output since May.
The Pound Sterling strengthened around noon with a unit of Sterling fetching $1.1776, but retreated thereafter to trade around $1.2721, netting a loss of over 0.1%.
The IHS Markit/CIPS flash composite Purchasing Managers’ Index (PMI) for UK dropped to a three-month low of 55.7 after hitting a six-year high of 59.1 in the previous month.
The Japanese currency Yen weakened to 105.38 a dollar, losing ground from 104.93 a dollar Tuesday evening.
The Aussie weakened with the AUD-USD pair dropping to 0.7072, about 1.4% down from Tuesday’s close of 0.7171.
The Swiss franc was weaker at 0.9237 a dollar, after closing at 0.9198 a dollar on Tuesday.
The Loonie was down 0.6% at 1.3383 a dollar.