US Dollar Steady Near Two-Week Highs Amid Risk-off Mood in Markets
Arslan Butt • 1 min read
On Wednesday, the US dollar is trading somewhat steady under a two-week high and holding onto its gains after crude oil prices posted a recovery over the previous session, even though recession fears weigh on global markets. At the time of writing, the US dollar index DXY is trading around 100.28.
The risk sentiment in markets soured earlier this week after US oil prices fell below $0 for the first time in history over escalating worries about weakening demand and a possible supply glut in oil markets. As a result of the ongoing coronavirus pandemic, several economies continue to remain in a state of lockdown while travel restrictions are expected to extend into the coming months as countries struggle to contain the spread of the virus.
The risk-off sentiment is supporting the safe haven appeal of the US dollar in markets for now. So far this week, the DXY has already gained around 0.5% against its riskier peer currencies.
Most economies worldwide, including the US, are expected to fall into recession this year in the wake of the pandemic, driving further weakness in global equities and crude oil prices lately. Meanwhile, the dollar makes gains as a result of this heightened uncertainty as it is considered one of the most liquid instruments to invest in.