Delay in Stimulus, More Lockdowns Support US Dollar

The US dollar remains supported early on Thursday as markets continue to focus on the increase in coronavirus cases across the world even as uncertainty around more fiscal stimulus in the US increases. At the time of writing, the US dollar index DXY is trading around 93.39.

France is the latest European nation to announce fresh restrictions in anticipation of a resurgence in cases as the weather turns cooler. Expectations of more lockdowns around the world are supporting the safe haven appeal of the US dollar in markets.

The greenback has also strengthened over a lack of clarity on the next coronavirus relief package in the US. Despite ongoing discussions, Treasury Secretary Steven Mnuchin stated that it would be difficult to successfully announce more financial aid in the coming weeks ahead of the presidential election.

When a country announces stimulus measures to support its economy, it reduces the confidence of investors and weakens its currency. However, with the US stimulus getting delayed, the dollar is likely to remain strong in the coming weeks.