Dollar rises on safe-haven buying due to weakness in U.S. equities
|The greenback extended its recent gains and rose to an eight-week high on Wednesday due to active safe-haven usd buying on weakness in U.S. stocks as well as continued fear over rising coronavirus infections.
Reuters reported the Federal Reserve will keep interest rates at zero until the economy reaches full employment, inflation is "sustainably" at 2% and the Fed is confident it will overshoot that goal, Chicago Federal Reserve President Charles Evans said Wednesday.
Versus the Japanese yen, dollar initially gained from 104.87 in Australia to 105.19 in Asian morning and despite retreating to 104.93 in Europe, the pair then rallied to session highs at 105.48 in New York on safe-haven usd buying on weakness in U.S. equities together with rise in U.S. Treasury yields.
Although the single currency continued its recent losing streak and fell to 1.1676 in Asian morning, then to 1.1673 at European open, the pair rose in tandem with cable to session highs at 1.1718. However, price then erased intra-day gains and later dropped to an 8-week low at 1.1652 on renewed usd's strength before trading sideways.
Reuters reported a flash PMI for the bloc's dominant service industry plummeted to 47.6 this month from 50.5, significantly below the breakeven mark and the most pessimistic forecast in a Reuters poll that had predicted a reading of 50.5.
The British pound went through a volatile session. Although cable met renewed selling at 1.2747 at Asian open and fell to an 8-week low at 1.2676 in European morning on continued fear over possible second lockdown, price erased intra-day losses and later rallied to session highs 1.2776 in New York on hopes that the European Union and UK will secure a Brexit deal before retreating to 1.2708 on profit-taking.
Reuters reported Britain is confident that it can overcome difficulties to secure a free trade deal with the European Union, senior cabinet minister Michael Gove said. And the European Union is determined to get a Brexit trade deal with Britain but will be firm and realistic with London after Prime Minister Boris Johnson decided to break the divorce agreement, EU chief negotiator Michel Barnier said on Wednesday.
Data to be released on Thursday :
New Zealand imports, trade balance, exports, France business climate, Swiss SNB interest rate decision, Germany Ifo business climate, Ifo current conditions, Ifo expectations, UK CBI distributive trades, U.S. building permit, initial jobless claims, continued jobless claims, new home sales, KC Fed manufacturing index, and Canada average weekly earnings.
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