Breaking News
Black Friday SALE: Up to 54% off InvestingPro! Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Dollar Strengthens; Helped by Housing Data and Fed Comments

ForexSep 23, 2020 02:54AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

By Peter Nurse

Investing.com - The dollar posted strong gains in early European trade Wednesday, supported by positive U.S. economic data, comments from a top Federal Reserve official and concerns about a second wave of coronavirus cases in Europe.

At 2:50 AM ET (0650 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.2% at 94.237, climbing to a eight-week high. 

Additionally, EUR/USD dropped 0.2% to 1.1681, falling to a eight-week low, GBP/USD fell 0.3% to 1.2689, while USD/JPY was up 0.2% at 105.12.

Helping the greenback was U.S. data showed that existing home sales surged to 6 million in August, the highest level in nearly 14 years. This puts September’s PMI sentiment data, due later Wednesday, firmly in focus.

Comments from Chicago U.S. Federal Reserve President Charles Evans also pushed the dollar higher, after he struck a hawkish tone and said further quantitative easing may not provide additional lift to the U.S. economy. He also hinted that it might be possible for the Fed to raise interest rates before inflation starts to average 2%.

A third factor helping the dollar, to the detriment of the euro and sterling, has been worries about surging coronavirus infections in countries like the U.K., France and Spain. On Tuesday, British Prime Minister Boris Johnson announced further restrictions for a possible six months to try and curb a rise in cases.

That said, Deutsche Bank (DE:DBKGn) sees these dollar gains as being temporary, as “a combination of the most negative real rates on record and the widest peacetime twin deficit leaves the dollar vulnerable to further weakness,” the bank’s analysts wrote in a research note. “The two key event risks for the rest of the year risk accelerating these trends.”

The bank sees these two key risks as being the races to win the White House and to produce a Covid-19 vaccine.

For Deutsche, a Democratic sweep in November would leave the dollar most vulnerable because it could lead to more economic stimulus, increasing deficits. And progress on a vaccine would boost expectations for global growth and support risk appetite, undermining the dollar.

Elsewhere, USD/CNY rose 0.2% to 6.7901, after the People’s Bank of China’s yuan fixing was weaker than expected for a second day.

“The fixing has been weaker for two days, which might be a signal that policy makers want to somewhat manage the pace of the rally,” said Hao Zhou, an economist at Commerzbank (DE:CBKG), in a Bloomberg report. “It is time for investors and policy makers to take a break and think about the pros and cons of the rally.”

NZD/USD dropped 0.5% to 0.6603, despite New Zealand’s central bank maintaining the size of its quantitative easing program and kept interest rates at a record low.

The central bank’s Monetary Policy Committee said it was “prepared to provide additional stimulus,” adding that it is making progress on additional tools including negative rates to use if more stimulus is required.

 

Dollar Strengthens; Helped by Housing Data and Fed Comments
 

Related Articles

India rupee sees worst week in seven on new variant
India rupee sees worst week in seven on new variant By Reuters - Nov 26, 2021

By Swati Bhat MUMBAI (Reuters) - The Indian rupee saw its worst week in seven on Friday, while the benchmark 10-year yield closed at its lowest in more than two weeks as concerns...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Andrew carson
Andrew carson Sep 23, 2020 8:05AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
King of the failed Fiats 🥴👑
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email