Dollar index jumps as stock market rally pauses
- Mild risk-off pushes the safe-haven dollar higher.
- Investors reassess the risk of a near-term coronavirus-led economic slowdown.
The dollar index (DXY), which tracks the greenback's value against majors, advanced on Thursday as a bull run in stocks took a breather, with investors reassessing coronavirus vaccine optimism.
The DXY traded 0.22% higher on the day near 92.50 during the Asian trading hours alongside moderate losses in the major Asian equity indices such as Japan's Nikkei, Hong Kong's Hang Seng and South Korea's Kopsi.
During the overnight trade, the risk sentiment weakened with investors selling the US stocks on fears of renewed coronavirus lockdown restrictions.
Comments from the World Health Organization Director Michael Ryan that vaccines would be available in large numbers in four to six months forced investors to scale back the optimism and consider the possibility of a near-term economic slowdown. Further, the US House Speaker Nancy Pelosi's rigid stand on the stimulus package worked against the equities.
As such, the safe-haven dollar picked up a bid. However, the gains were muted as investors continued to believe that the Federal Reserve would boost monetary stimulus, compensating for the lack of effort on the fiscal front.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
