US Dollar Drifts Lower as Strong Earnings Reports Lift Market Sentiment
Aiswarya Gopan • 1 min read
The US dollar is exhibiting signs of weakness as its safe haven appeal comes under pressure on account of an improvement in market sentiment, driving investors towards riskier equities. At the time of writing, the US dollar index DXY is trading around 92.74.
The DXY has eased lower after rising above the key 93 level in the previous session and the risk-on mood has impacted the safe haven currency Japanese yen as well, driving it down from multi-month peaks against other leading currencies. The mood in global markets was lifted by strong earnings results posted by companies, reassuring markets that even the highly contagious delta variant may not deter economic recovery significantly.
This sentiment not only drove a rally on Wall Street in the previous session but is also supporting other leading currencies in the forex market. GBP/USD has reclaimed the $1.37 level while AUD/USD surged back above the $0.73 mark despite the ongoing lockdowns across several parts of Australia.
However, the common currency has shown muted moves, rising slightly but still holding under $1.18 against the US dollar as markets wait to hear the ECB’s policy decision. While the central bank is expected to continue with its dovish stance, it is expected to announce more changes to their strategy, which will be closely watched.
Later in the day, the US dollar could experience some moves on the release of the latest weekly jobless claims figures. According to a poll by Dow Jones, the number of Americans filing fresh unemployment claims is expected to ease down to 350k for the past week after the previous reading of 360k.