Dollar rose above a one-week low against major peers
The U.S. dollar grew on Wednesday to trade above a one-week low against other major currencies. The rise came amid concerns that the highly infectious Delta COVID-19 variant could hinder a global economic recovery.
Risk appetite in global markets has increased since the FDA gave full approval to Pfizer in a move that could stimulate U.S. inoculations.
On Tuesday, Dr. Anthony Fauci, the country’s top infectious disease expert, announced that the U.S. could get coronavirus under control by early 2022.
The U.S. dollar index, which measures the dollar against six rivals, gained 0.07% to 92.981. In the previous session, it fell to 92.804 for the first time since August 17.
The U.S. had boosted until the start of this week. Remarkably, the U.S. dollar index reached a 9 1/2-month peak of 93.734 on Friday, on concerns over Delta’s economic impact and as the Fed signaled a tapering of stimulus was likely this year.
Remarkably, anticipations have diminished that Federal Reserve Chair Jerome Powell will indicate a timeline for tapering. The market is waiting for his announcement on Friday at the Fed’s annual economic symposium at Jackson Hole, Wyoming.
Global growth worries will likely remain the major driver of the dollar until Friday
The U.S. dollar boosted 0.06% against the Japanese yen to trade at 109.745 yen, close to the middle of the trading range since early July.
The American currency against the euro declined by around 0.1% to settle at $1.1744. The pair remains near the one-week low of $1.17655 hit overnight.
Meanwhile, the British pound traded at $1.3730. In the previous session, it advanced to as high as $1.37475, its highest level since November 19.
The risk-sensitive currency, the Australian dollar, dipped 0.06% to trade $0.7253. On Tuesday, it hit a one-week peak of $0.7271.
According to a strategist at Commonwealth Bank of Australia, Kim Mundy, global growth worries will likely remain the major driver of the dollar until Friday.
Mundy also added that the risk is likely to a move higher on August 27 if Fed Chair Jerome Powell reinforces that economic data are consistent with a near-term tapering.
She added that CBA anticipates the Fed announcing its plan to taper in September, actually start tapering in October and finish by September 2022. Commonwealth Bank of Australia’s strategist reported that the dollar uptrend has further to run.
In cryptocurrencies, the world’s largest cryptocurrency traded at $47,512.30 after hitting $50,000 earlier this week. Meanwhile, the second-biggest cryptocurrency, Ethereum, is trading at $3,122.49 at the time of writing.