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Dollar Up, European COVID-19 and U.S. Inflation Worries Continue

ForexMar 24, 2021 10:09PM ET
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© Reuters.

By Gina Lee

Investing.com – The dollar was up on Thursday morning in Asia, reaching a four-month high against the euro. The gap in the U.S. and European COVID-19 response continues to widen thanks to fresh lockdowns and a delayed vaccine rollout in the continent.

The U.S Dollar Index that tracks the greenback against a basket of other currencies inched up 0.04% to 92.650 by 9:53 PM ET (1:53 AM GMT), with the safe-haven U.S. currency remaining broadly strong following a two-day rally.

The USD/JPY pair edged up 0.20% to 108.94.

The AUD/USD pair edged up 0.16% to 0.7594 and the NZD/USD pair edged up 0.11% to 0.6969.

The USD/CNY pair edged up 0.15% to 6.5327 and the GBP/USD pair inched up 0.01% to 1.3684.

Meanwhile, Europe continues its battle against a third wave of COVID-19 cases. However, even Germany’s extended, strict lockdown failed to restore confidence in the regional economic outlook, with discontent with Chancellor Angela Merkel's handling of COVID-19 compounded instead.

"The weak point in Europe remains around the vaccine rollout amid the rise in new virus cases and the tightening of restrictions ... which likely means the mooted acceleration in Q2 may have to be pushed back by a quarter... the narrative of the U.S. outperforming Europe in the coming quarter remains," National Australian Bank director of economics and markets Tapas Strickland said in a note.

Even Wednesday’s positive economic data for March, including the German Manufacturing Purchasing Managers' Index (PMI) as well as the European Manufacturing and Service PMIs, failed to lift investor sentiment. The most recent lockdowns likely mean that the gains will not hold through April.

Investor concerns have been amplified, with the B.1.1.7. COVID-19 strain first seen in the U.K. driving the latest wave of cases said Commonwealth Bank of Australia (OTC:CMWAY) strategist Kim Mundy.

The euro hovered near the four-month low of $1.1809 touched earlier in the Asian session.

Back across the Atlantic, U.S. Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell reiterated their confidence in the U.S. economic recovery as they testified before Congress for a second day on Wednesday.

Yellen said she was open to banks buying back stock and paying dividends, a day after she mulled tax hikes to fund infrastructure upgrades and other investments and set off investors’ alarms. Powell added that 2021 will be a "very, very strong year in the most likely case.

Inflation remains a concern for investors, however, with disruptions in the supply chain exerting cost pressures for manufacturers. Wednesday’s manufacturing and services PMIs indicated that U.S. factory activity picked up in March.

Dollar Up, European COVID-19 and U.S. Inflation Worries Continue
 

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Comments (3)
Kelly Mayer
Kelly Mayer Mar 25, 2021 1:41AM ET
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Some EU countries are having record low covid cases and deaths. Report that.
Kelly Mayer
Kelly Mayer Mar 25, 2021 1:41AM ET
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Same as reporting the US us surging in cases while a few major states are really recovering nicely and do not follow the catastrophic handling of other states. Either that, or someone is manipulating numbers.
FATME sahraie
FATME sahraie Mar 24, 2021 10:34PM ET
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how to get money
FATME sahraie
FATME sahraie Mar 24, 2021 10:34PM ET
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what is this
 
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