Risk-on Mood in Markets Makes US Dollar Trade Weaker
Arslan Butt • 1 min read
The weakness in the US dollar continues into early trading on Thursday, a day after Biden’s inauguration, as traders eagerly await the new administration to roll out more stimulus measures for the US economy. At the time of writing, the US dollar index DXY is trading around 90.34.
The safe haven appeal of the US dollar has been dented, sending investors towards trading riskier currencies instead after Biden was sworn in as the next US President. Last week, Biden had unveiled plans for an additional fiscal stimulus package worth $1.9 trillion, which included more stimulus checks for Americans and unemployment benefits.
Despite the rise in coronavirus cases across some countries, global markets are trading with a risk-on sentiment over expectations that economies could rebound this year and overcome the damage caused by the pandemic. The rollout of COVID-19 vaccines are also supporting the demand for riskier assets and weakening the appeal of the greenback.
The Canadian dollar strengthened to a three-year high against the USD in the previous session after the Bank of Canada held interest rates steady. Meanwhile, commodity currency AUD is also trading bullish against the US dollar in the wake of an optimistic employment report for the month of December.