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Dollar Up Over COVID-19 Worries and Potential U.S. Tax Hikes

ForexMar 24, 2021 12:26AM ET
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By Gina Lee – The dollar was up on Wednesday morning in Asia near a four-month high, as COVID-19 concerns, potential U.S. tax hikes, and tensions over tit-for-tat sanctions between China and the West turned investors towards the safe-haven asset.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.04% to 92.382 by 12:18 AM ET (4:18 AM GMT).

The USD/JPY pair inched down 0.05% to 108.50.

The AUD/USD pair was down 0.21% to 0.7606 and the NZD/USD pair was down 0.30% to 0.6983.

The USD/CNY pair inched up 0.10% to 6.5227. The sanctions imposed on China by the U.S., Europe, and the U.K. over human rights issues, prompting the former to retaliate with sanctions of its own, continue to add to investor market concerns.

The GBP/USD pair edged down 0.17% to 1.3727.

The dollar index rose to a two-week high as the Asian session opened and was near the four-month record of 92.506 set earlier in the month. The index “looks determined to test the top end of a new, higher 91-93 range we think will form in coming weeks,” Westpac analysts said in a note.

“Extended European lockdowns have sapped confidence in a synchronized global rebound; meanwhile, the U.S. will have an impressive rebound in coming months amid a strong vaccine roll-out, stimulus payments, and economic re-openings,” the note added.

A third wave of COVID-19 cases in Europe prompted fresh lockdowns in several countries. Germany extended its lockdown until Apr. 18, with France and Italy also extending restrictive measures, and the euro fell towards a four-low of $1.18360.

Across the Atlantic, the U.S.’ data safety monitoring board warned that the data submitted by AstraZeneca (NASDAQ:AZN) PLC and the University of Oxford in support of its COVID-19vaccine could be outdated.

Also nudging investors towards safe-haven assets was U.S. Treasury Secretary Janet Yellen’s testimony before the House Financial Services Committee, where she said that future tax hikes will be needed to pay for infrastructure projects and other public investments.

Federal Reserve Chairman Jerome Powell, testifying alongside Yellen, added that an expected near-term spike in inflation will be transitory. His comments prompted the benchmark U.S. Treasury yield to drop to 1.6048% on Wednesday.

Yellen and Powell will repeat their testimonies before the Senate Banking Panel later in the day.

In cryptocurrencies, bitcoin fell below $54,000, less than two weeks after hitting a record high of $61,781.83.

Dollar Up Over COVID-19 Worries and Potential U.S. Tax Hikes

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