Dollar Retains Positive Tone on Covid Fears, Fed Tapering

Dollar Retains Positive Tone on Covid Fears, Fed Tapering
Dollar Retains Positive Tone on Covid Fears, Fed Tapering
© Reuters.

By Peter Nurse – The dollar was largely unchanged  in early European trade Friday, but the tone remains positive on worries the Covid-19 virus could stunt global growth just as the Federal Reserve starts to cut back its pandemic-era monetary stimulus.

At 2:50 AM ET (0650 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded flat at 93.558, after earlier Friday rising as high as 93.612 for the first time since early November. It’s on track to gain 1.1% this week, the most in two months.

was 0.1% higher at 1.1686, near the over 9-month low of 1.1665 reached overnight, was largely flat at 109.70, while fell 0.1% to 1.3624, not far off a new one-month low after a sharp 2.5% fall in U.K. in July, a signal that the country’s recovery may be losing momentum. 

That said, the biggest losses against the dollar were reserved for the so-called commodity currencies. fell 0.3% to 0.7127, more than a 9-month low, over 3% lower this week, as a Covid-19 lockdown in Sydney was extended by a month.

dropped 0.3% to 0.6824, just above a new 9-month low, and almost 3% lower this week, with the country’s central bank delaying a rate hike earlier this week because of a snap lockdown over a fresh Covid-19 outbreak, which was extended earlier Friday.

rose 0.3% to 1.2870, a fresh six-month high, with the sudden drop in oil prices hurting the Canadian economy.

The spreading of the highly-transmissible delta variant of the Covid-19 virus is prompting concerns that the economic recovery from the first outbreak may be stalling. But, adding to this is the idea that the Federal Reserve, the central bank of the world’s largest economy and primary growth driver, is one the verge of easing its bond-buying stimulus.

“The mood-music from the Fed is very much one of a glide-path to tapering,” said analysts at ING, in a note, and “it looks like a lot of demand for the dollar is coming from investors pulling out of growth stories overseas.”

This means the market’s focus is now very much on the Fed’s annual symposium in Wyoming, which starts at the end of next week.

Elsewhere, traded 0.1% higher at 6.5015, just off the new three-week high of 6.5104 seen earlier and above the key 6.50 level, after the People’s Bank of China maintained its one-year loan prime rate at 3.85% and the five-year LPR at 4.65%. 

While this move to keep its benchmark interest rates unchanged was widely expected, there had been some looking for a cut given the slowdown in growth at the world’s second largest economy after a spate of localized Covid-19 outbreaks that have resulted in extensive lockdowns. 


Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Leave a Reply

Your email address will not be published. Required fields are marked *

New Brokers
2.8 rating
Buy & sell Crypto in minutes
3.0 rating
Note: Investing involves risks. You can lose your deposit. We advise you to only invest in financial products which match your knowledge and experience.
2.0 rating
Interactive Brokers attracts active traders with low per-share pricing, an advanced trading platform.
4.3 rating
eToro is the world’s leading social trading platform, with thousands of options for traders and investors.
Risk Warning: The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory or other services by AdonFinance. In addition, the content of the website offers no opinion with respect to the suitability of any security or any specific investment. Trading foreign exchange, stocks, cryptocurrencies and commodities is potentially high risk and may not be suitable for all investors. The high level of leverage can work both for and against traders. Before any investment with any broker you need to carefully consider your targets, previous experience, and risk level. Forex trading can result in the loss of your money, as a result, you are expressly cautioned that you should never invest or trade with money that you cannot afford to lose. For the avoidance of doubt, AdonFinance's service provides Brokers reviews in the Financial market. AdonFinance, its subsidiaries, agents or affiliates will assume no responsibility whatsoever for your trading activity. © Copyright 2021 AdonFinance