US Dollar Weakens as Traders Switch Towards Riskier Currencies
Arslan Butt • 1 min read
Early on Wednesday, the US dollar continues to lose ground and weaken against other major currencies as investors switch to trade riskier assets over rising hopes for additional stimulus measures boosting economic recovery in the aftermath of the coronavirus pandemic. At the time of writing, the US dollar index DXY is trading around 97.40.
The safe haven appeal of the US dollar has suffered as the risk appetite in markets improves as countries begin easing lockdowns and resuming activity across the world. This has raised hopes for economic recovery to begin soon, increasing traders’ confidence to trade riskier instruments in markets.
The AUD, GBP and the Chinese Yuan have strengthened against the dollar as traders focus on economic recovery after the lifting of lockdown restrictions in these respective countries. Meanwhile, the euro has also gained against the greenback over rising hopes for the ECB to roll out more stimulus measures to protect the worst affected economies in the Eurozone.
Although the US economy has also reopened to some extent, the ongoing riots and protests across the country are holding back signs of recovery across the US for now. The risk-on sentiment has helped US stocks rally higher in recent sessions despite President Trump’s warnings about deploying the military against the protesters.