US Dollar Strengthens as Safe Haven Amid Resurgence in Cases
Arslan Butt • 1 min read
The US dollar continues to trade strong early on Friday and looks all set to post the best weekly performance so far this month, supported by expectations of a delay in the coronavirus relief package. At the time of writing, the US dollar index DXY is trading around 93.80.
Although negotiations among the White House, Senate Republicans and House Democrats are ongoing, the deal for the next round of fiscal stimulus is nowhere near finalized yet, despite President Trump offering to increase his initial plans for $1.8 trillion worth of stimulus. Whenever a country rolls out more fiscal stimulus to support its economy, weakening its currency. In this case, the dollar is benefited from a lack of progress in the financial aid package discussions.
The US dollar is also making gains as a safe haven currency amid a resurgence in the number of coronavirus cases across Europe and the US. Europe and Britain have already announced fresh restrictions to curb the spread of the virus, raising fears that economic recovery could get derailed and delayed.
So far this week, the US dollar has gained around 0.8% against its major rivals – the highest gains since late September. On the other hand, the Euro has lost around 1% of its value against the greenback as traders worry about the economic impact of the second wave of the pandemic.