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Dollar heads for weekly gain as new infections sap confidence

By Administrator_India

Capital Sands

The dollar headed for its best week in a month on Friday as a resurgence in coronavirus cases knocked confidence in a rapid economic recovery and drove investors to the safety of the world’s reserve currency.

Geopolitical tensions on the Korean peninsula, in the Himalayas and between China and its trading partners have also weighed, and the balance of risks kept morning moves modest.

The dollar traded near a two-week high against a basket of currencies and has gained about 0.4% for the week, its largest weekly rise since mid-May. That stalled the rally in the risk-sensitive Australian and New Zealand dollars.

“The bulls need new news and inspiration to push prices higher. That inspiration isn’t readily available,” said Chris Weston, head of research at Melbourne brokerage Pepperstone.

President Donald Trump on Thursday renewed his threat to cut ties with China, a day after the first high-level talks between the countries in months amid souring relations. The meeting, between top diplomats in Hawaii, was inconclusive.

Meanwhile an uptick in coronavirus cases in many U.S. states this week, along with rising hospitalisations, reflected a troubling national trend that has seen daily infection numbers climbing after more than a month of declines.

More than 150 new cases have also been detected in Beijing since last week, prompting a lift in the city’s alert level and a reintroduction of travel curbs.

The Aussie was steady on Friday at $0.6854 and testing its 20-day moving average. The kiwi slipped to $0.6407, its lowest since Monday. The safe-haven Japanese yen firmed a fraction to 106.90 per dollar.

The British pound sat a fraction above a two-week low at $1.2403, under pressure as investors fretted that the Bank of England may not be planning enough bond buying to support confidence through 2021.

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