US Dollar Gains as Powell Dismisses Possibility of Negative Rates

The US dollar is trading steady and holding on to its recent gains a day after Fed chairman Jerome Powell reassured markets that the US central bank would not resort to negative interest rates in the wake of the coronavirus crisis. At the time of writing, the US dollar index DXY is trading around 100.27.

However, markets are trading somewhat mixed as updates about the pandemic dominate the sentiment and keep markets under pressure over worries about the economic impact. On Wednesday, Powell reinforced other Fed policymakers’ recent views against taking interest rates below zero and helped investors regain their trust in the US dollar amid the heightened uncertainty.

The focus shifts back to economic data releases, with weekly jobless claims data coming out later in the day, which could spur some moves in the greenback. By the end of the week, the dollar could see some movement over the release of manufacturing data from the US as well.

Beyond economic data, traders are also focused on the latest developments surrounding reopening of the American economy over the coming weeks. Amid worries and warnings about a possible second wave of infections, the US government looks all set to restart economic activity, at least partially, in some sectors to prevent further damage to the economy.