The US dollar fell back from three-month highs yesterday as risk appetite returned to equities higher, although investors remained cautious amid inflation fears. and concerns about the contagious Delta variant.
Another safe-haven is the Japanese yen, which also fell against the US dollar, as risk aversion eased.
The Delta variant of the coronavirus, which has caused a surge in cases around the world, has become a top investor concern along with inflation this week, sending global inventories plummeting. European stock markets though were up yesterday and Wall Street shares rose as well.
In yesterday afternoon trading session in New York, the USD Index fell 0.2% to 92.755. On July 20, the index hit its highest level in more than three months.
Market participants though remain optimistic about the outlook for the dollar, at least for the next few months.
“Between yield spreads and COVID-fueled safe-haven demand, the US dollar has become the standout,” said Matt Weller, global head of market research at FOREX.com and City Index. for the forex ball this week. These themes will continue to support the dollar in the coming weeks, but a rebound in the market's risk appetite, especially if fueled by additional monetary or fiscal stimulus measures. from the United States, should trend the greenback's primal strength."
The Federal Reserve's quantitative easing or stimulus measures have constrained the dollar because it increases the money supply in the financial system.
Against the Japanese yen, the US dollar rose 0.4% to 110.26.
The Australian dollar, seen as a liquidity proxy for risk appetite, fell to its lowest level since November before recovering somewhat. It was last up 0.4% at $0.7357, while the New Zealand dollar was up 0.9% to $0.6976.
The British pound, on July 20 hit its lowest level since February, up 0.6 percent at $1.3715.
The euro rose 0.2% against the dollar to $1.1797.
Money markets are heading for the European Central Bank (ECB) meeting on July 23. A dovish tone is expected after ECB President Christine Lagarde heralded the guidance adjustment in her interview last week.
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