US Dollar Weakens as Fed Starts Buying Corporate Bonds
Arslan Butt • 1 min read
Early on Tuesday, the US dollar is trading somewhat weak against its major peers after making some gains in the previous session on the back of the risk-off mood in markets, which supported its safe haven appeal against other riskier instruments. At the time of writing, the US dollar index DXY is trading around 96.48.
The risk appetite in global markets was boosted by reports about the Fed starting its purchase of investment grade US corporate bonds to support companies’ recovery after the pandemic. A more dovish Fed boosted hopes for economic recovery and dented the safe haven appeal of the US dollar.
The US, China and several other countries have reported an uptick in the number of infections over the past few days, raising concerns that reopening of economies could worsen the pandemic and drive governments to possibly reimpose lockdown measures. Any repeat of the lockdown could further damage the economy and make recovery even more delayed and complicated.
The uncertainty about economic recovery has been supporting the US dollar over the past few sessions. Economists expect the greenback to trade in a range amid the mixed market sentiment prevailing in the near future.