Dollar Up, But Near Three-Year Lows, Fed Continues Dovish Tone

By Administrator_India

Capital Sands

The dollar held its earlier gains on Thursday morning in Asia, amid growing concern over the spike in COVID-19 cases in China and the U.S.

Beijing reported 21 new cases linked to an outbreak at the Xinfadi market on Wednesday, while Texas reported an 11% jump in hospitalizations on the same day.

The spikes pointed to a troubling trend as the number of cases in both countries had been falling since May, and triggered investor concerns about the risks of resuming economic activity before a cure for the virus is developed.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies slipped 0.12% to 97.028.

The USD/JPY pair was down 0.13% to 106.86

Some investors remained optimistic about the dollar and yen despite their retreats.

“Upside for U.S. stocks and other risk assets has dwindled because more people are talking about a second wave of virus infections…this supports the dollar and the yen because they are both safe havens”, senior analyst said.

The AUD/USD pair lost 0.23% to 0.6867, after Australia announced a jump in the unemployment rate for May to 7.1% earlier in the day.

The NZD/USD pair was down 0.22% to 0.6442 and the USD/CNY was down 0.09% to 7.0777.

The GBP/USD pair gained 0.01% to 1.2555, with the pound trading in a narrow range ahead of the Bank of England’s policy meeting later in the day. The central bank is widely expected to give its quantative easing program a boost of at least GBP 100 billion ($125.515 billion) amid an economy hard hit by COVID-19 and tough negotiations for a free trade agreement European Union.

“The pound has its own problems. The British economy is not in good shape and a hard Brexit remains a risk,” Analyst said.

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