US Dollar Gains as Safe Haven Amid Risk-off Mood in Markets
The US dollar is making gains as its safe haven appeal strengthens amid mounting fears about the third wave of the coronavirus pandemic in Europe which has prompted fresh lockdowns and restrictions across several countries. At the time of writing, the US dollar index DXY is trading around 92.39.
The market sentiment also turned risk-off after US Treasury Secretary Janet Yellen hinted at possible upcoming hike in corporate taxes, which drove Treasury yields higher even as equity markets and commodities like crude oil weakened. The rise in bond yields further strengthened the reserve currency and sent it higher against its major rivals.
The dollar index surged to the highest level seen in two weeks, and getting close to a four-month high in early trading today. Analysts forecast a possibility for the greenback to test the 93 level in the coming weeks.
The extension of lockdown measures and a slowdown in the COVID-19 vaccine rollout across Europe have raised concerns of a delay and weakness in economic recovery across the region and also impact global economic recovery in turn. Traders also turned towards the safety of the US dollar after a US-based health agency cautioned that AstraZeneca could have used outdated data when revealing the efficacy of its COVID-19 vaccine.
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