🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Dollar Rides Safe-Haven Momentum, Set for Biggest Weekly Gain Since March

Published 09/25/2020, 02:17 PM
Updated 09/25/2020, 02:33 PM
© Reuters.
EUR/USD
-
GBP/USD
-
BAC
-
CBKG
-
JEF
-
DX
-

By Yasin Ebrahim

Investing.com - The dollar rose to fresh two-month highs on Friday, and is set to close out the session with its biggest weekly increase since March, underpinned by safe-haven momentum amid weaker-than-expected economic data and ongoing worries about the economic fallout from a lack of further federal stimulus.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.05%, to 96.60.

The Commerce Department reported durable goods orders increased just 0.4% in August from the prior month, missing economists' forecasts of 1.5%. A deeper look into the details from the report, however, were more positive than the headline number suggests, though the pace of orders is unlikely to be sustained, Jefferies (NYSE:JEF) said.

"Sustaining this momentum beyond Q3, however, will be very difficult. The financing environment is very supportive, but low capacity utilization rates and election uncertainty are likely to weigh on capex, at least in the near-term. Businesses typically ramp up investment when utilization rates are tightening. That's clearly not the case today; capacity utilization is still historically low at 71.4%, which is down 6.4 ppts compared to last year," Jefferies said in a note.

Elsewhere, the dollar was also supported by weakness in the euro and the pound as a second wave of Covid-19 infection threatens further lockdowns in the EU and U.K.

EUR/USD fell 0.40%, to $1.1625, and GBPUSD fell 0.26%, to $1.2715.

"The US dollar is proving to be the market's preferred safe-haven currency as Europe is hit by a second wave of the virus. But political risks are likely to limit its appreciation potential," Commerzbank (DE:CBKG) said.

Others, however, suggest there is still more upside for the greenback. "We estimate there is some room left for the USD to move higher in the coming weeks as we look for certain retests, measured moves or Fibonacci levels to be reached. The rally in the USD this month is viewed as the start of a stretched short position washout and resolution of oversold momentum conditions," Bank of America (NYSE:BAC) Global Research said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.