The US dollar touched a two-month high as appetite for riskier assets fell over concerns regarding the resilience and economic recovery in the United States and Europe following a second wave of coronavirus infections. The dollar benefited from another spike in coronavirus cases while Federal Reserve policymakers called on the government to provide more fiscal support, fuelling high-volume selling of risky assets overnight. Unlike their European counterparts, US Democrats and Republicans have so far failed to agree on a relief bill. US business activity slowed in September and new restrictions to quell a surge in coronavirus infections in Europe hit the services industry. FED Vice Chair Richard Clarida said that the US economy remained under threat from unemployment and weak demand, calling for more fiscal stimulus while rates are to remain low until inflation hits 2%.
The Chinese yuan weakened after touching a near 15-month high changing hands at 6.8345 per dollar after the Chinese regulator increased foreign exchange quotas for the first time since April 2019 allowing more domestic firms to invest abroad. The $3.36 billion worth of fresh quotas come as the yuan has rallied against the dollar over the past weeks amid accelerating foreign money inflows.
Australian and New Zealand dollars continue to be under pressure on growing expectations their central banks could deliver more monetary stimulus. A decline in commodity prices is expected to increase downside risks for both currencies. The Aussie fell 0.45% to $0.7045, near its weakest since July 21. As anticipated yesterday, the AUD broke through the 100-day exponential moving average support yesterday and is now testing mid-August’s support levels at 0.6523 against the US dollar. A recent decline in commodity prices is expected to increase downside risks for Antipodean currencies.
The British pound swung between gains and losses but held above $1.27 before an announcement of Britain's plans to protect jobs and employment later in the day. The pound bought $1.2723, near its weakest level against the US currency since late July. The dollar has rallied this week as rising coronavirus infections in Europe and Britain undermined investor optimism about a vaccine progress. It was quoted at 0.9253 Swiss franc, nearing a nine-week high. The greenback bought 105.38 yen, holding onto a 0.4% gain from the previous session.
.jpg)
