U.S. dollar rises, Euro drops to $1,12 as Covid cases soar
Head of Investment Research
Growth-related currencies have been suffering significant losses from the growing anxiety over the impact of surging Covid cases around the world, while the safe-haven currencies extend their gains on lower risk appetite and higher inflation rates.
Euro has been under pressure since the beginning of November, falling to as low as 1,12 to the dollar, as investors are concerned for the possible renewed lockdowns in Europe as COVID cases surged again.
Commodity-linked currencies Canadian and Australian dollars have been falling along with crude oil and industrial metal prices, while the British Pound remains depressed on Brexit worries.
Safe-haven currencies U.S dollar, Japanese Yen, and Swiss Franc have also benefited from the risk aversion sentiment across the board, as the soaring virus cases deteriorate the global economic outlook for the last quarter of the year.
The DXY dollar index, which measures the currency against a basket of six peers, broke above 96 level for the first time since July 2020, getting support from the hawkish Federal Reserve, the surging bond yields, and the stronger-than-expected U.S. economic data.
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