Dollar pulls back from 2-month high on profit-taking
The US dollar fell against a basket of major currencies Monday, on profit-taking from a 2-month high of 94.74 points hit on Friday, in addition to improved risk appetite amid hopes for a new stimulus package in the US.
The dollar index fell 0.5% to 94.15 points, after opening at 94.58, and hit an intraday-high of 94.64.
The index rose 0.3% on Friday, and hit its 2-month high of 94.74 points, on increased by buying momentum against a basket of major currencies.
The US dollar gained 1.6% during the past week, posting its third weekly gain in a month and the largest since March.
The biggest weekly gain in six months came after the greenback shined as the best alternative investment, due to concerns about the global economy after several governments tightened their lockdown restrictions to curb the spread of the coronavirus.
Following these developments, most global stock markets were hit by a broad sell-off move, which has sparked concerns over a liquidity crunch.
Hopes for a new fiscal stimulus in the US were renewed, after House Speaker Nancy Pelosi said on Sunday that a solution can be reached with the White House on another coronavirus stimulus plan, adding that she believes they can come to an agreement.
The Australian dollar rose against most currencies on Monday, as investors shifted to stocks and risky currencies and eschewed the US dollar. This came amid anticipation of the upcoming US presidential debate between the US President and Republican candidate Donald Trump and his Democratic rival Joe Biden scheduled this week. The increased exchange of criticism between the two presidential candidates that will be reflected in the results of the debate is expected to impact the market movements in the coming period. Otherwise, the race by big pharma to develop an effective and safe Covid-19 vaccines is progressing. Companies such as Moderna, Johnson & Johnson and Pfizer are close to finishing their clinical trials of their promising vaccines, which will be available in the next few months. However, the World Health Organization has warned that the crisis is not under control yet, and expected the number of deaths from the deadly disease to rise to 2 million before an effective vaccine is out. As of 18:24 GMT, AUD/USD rose 0.6% to 0.7068, after the hit an intraday high of 0.7075 and a low of 0.7025.
The New Zealand dollar fell against most of its peers on Monday, weighed down by concerns over a second wave of coronavirus infections. Banking and financial stocks in most global markets came under pressure amid expectations for some countries to reinstate another public lockdown. Protests took place in France and the UK due due to government plans to re-impose lockdown restrictions, especially after British Prime Minister Boris Johnson told Parliament that his government was considering more strict lockdown. The coronavirus death toll is now close to 1 million victims globally, and infections rose to 31 million cases. Otherwise, New Zealand's credit card spending index fell 11.9% in August vs. a drop by 5% in June. As of 18:00 GMT, NZD/USD fell 1.5% to 0.6661, after hitting a day high of 0.6778 and a low of 0.6652.
The US dollar continued to rally against most major currencies on Friday, which put weighed down on precious metals and attracted safe-haven demand. Data showed that the US durable goods orders index rose 0.4% in August, beating analysts' forecasts of 1.1%. The core reading of the durable goods orders index (excluding energy and food prices) rose 0.4% in August, also lower than forecasts of 1%. Several FOMC members issued conflicting statements, as some stated that the US economic crisis is worse than it appears, and others expressed that the economy would recover from the pandemic soon. Bearing in mind that Fed Chairman Jerome Powell stressed in his testimony before the US Congress that the ball is now in Congress' court to support US companies most hit by the coronavirus. The dollar index rose against a basket of currencies by 0.3% to 94.6 points as of 19:42 GMT, after it hit a high of 94.6 and a low of 94.1.