US Dollar Rises to Two-Week High as Markets Worry About Second Wave of Coronavirus
Arslan Butt • 1 min read
Early on Tuesday, the US dollar has strengthened to the highest level in two weeks against other major currencies as its safe haven appeal returns amid rising worries about a possible second wave of infections in countries that have recently reopened their economies. At the time of writing, the US dollar index DXY is trading around 100.26.
The risk appetite of the markets came back under strain over escalating concerns that China, South Korea and Germany were experiencing a resurgence in the number of coronavirus cases as they resumed economic activity. This sentiment has pushed risk currencies lower and helped the US dollar make gains once again.
The US dollar has also benefited from a gain in 10-year US Treasury yields, which hit a weekly high above 0.7% after Fed officials maintained that they would not resort to negative interest rates. The statements also helped two-year US Treasury yields rise higher.
The US dollar is likely to remain supported in the near future even as economies look to reopen as worries about recovery being delayed dents the market sentiment. The coronavirus pandemic is expected to drive a deep economic recession globally, which could keep the risk sentiment under pressure and make traders prefer the safety of the greenback over other instruments.