U.S dollar stands firm, foreign exchange traders remain neutral

The U.S dollar Index remained marginally firm against other major currencies such as the Swedish Krona, Euro, Swiss Franc, and British pound.

Against a bouquet of major currencies, the American dollar index showed more grounds as it moved higher to trade at 97.744, before staying flat above strong support levels of 97.25

U.S dollar index price swing remained modest, as currency traders felt resurgence fears of COVID-19 was overblown out of proportion.

Importance of tracking the U.S dollar Index; Individuals, businesses hoping to meet a foreign exchange payment obligation, transactions via the dollar to countries like Europe, Japan, would have the need to pay less U.S dollars to fulfill such payments.

But with the World Health Organization stating a record increase in global cases yesterday especially in western countries and most part Africa, currency traders’ optimism became cold.

“We expect the FX markets to remain caught between recovering economic indicators and concerns about a second-wave of COVID-19 infections in the week ahead,” analysts at Barclays said in a note to Reuters.

Some currency traders expect sentiments to be risk-averse in this coming week.

“It won’t take much for the market to see this as a liquidity headwind…and when we mix in rising concerns around a renewed COVID crisis then it may keep risk on the back foot this week,” Chris Weston, head of research at Pepperstone, told CNBC.


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