FOREX: US Dollar Retreats against Major Currencies
The dollar retreated against its major partners in early-Thursday trading, as appetite for risk-taking increased after a flight toward safety earlier in the week. The dollar had steadied amidst inflation rate worries and yield declining in recent time.
However, a busy US data schedule Thursday, including weekly initial jobless claims and existing home sales for June appears to have provided some directions.
The dollar may be weak, though currencies traders said they are watching the greenback index (DXY) to ensure predictions do not swerve off significantly.
MarketForces Africa monitors show that the dollar index is under some selling pressure after peaking above 93.00 in the past three months.
Analysts noted that the index’s recent positive change was largely supported by a recurrence of risk aversion in response to a recurrence of coronavirus concerns.
At the same time, the Dollar’s constructive stance continues to be supported by a strong economic recovery, unexpectedly high inflation and growing rumours of interest rate hikes/QE cuts earlier than expected.
Reports show that there are no Federal Reserve speakers this week or early next week in advance of the two-day Federal Open Market Committee meeting on Tuesday and Wednesday.
A quick summary of foreign exchange action heading shows that EUR-USD steadied near the 1.1800 level, up from Wednesday’s three-and-a-half-month low of 1.1750, but still well below the 1.2250 levels of late May.
Rising appetite toward risk has lifted US equity markets from their Monday declines but pushed down the dollar.
Good news on the effectiveness of the Pfizer and AstraZeneca vaccines against the Delta variant of COVID-19 and hopes that Thursday’s European Central Bank meeting will provide clearer forward guidance are lifting the euro.
USD-JPY settled in a narrow range below Wednesday’s eight-day high at 110.39, well above the 109.44 two-month low seen on Monday.
While the yen has been underperforming the dollar in the latest phase, both currencies have been losing growth against other currencies after their flight-to-safety gains earlier in the week.
GBP-USD has recovered from its lows earlier in the week due to increased risk-taking, hitting a high of 1.3758 Thursday compared with the six-month low of 1.3572 seen Tuesday.
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The pound is also up against the euro and other currencies as the daily new COVID case count has slowed even as social restrictions have been lifted. As the UK approaches herd immunity, the outlook for the pound remains to the upside.
USD-CAD has settled in the mid-1.2500s, above Wednesday’s low of 1.2523. The Canadian dollar has rebounded by over 2% against the US dollar from its lows seen earlier in the week.
Oil prices have rallied by just over 8% out of the two-month low that was seen Wednesday. More optimism from investors should support the Canadian dollar while keeping the US dollar’s upside potential contained.
FOREX: US Dollar Retreats against Major Currencies
