Dollar Edges Higher; Caution Reigns as Week Starts By Investing.com


© Reuters.

By Peter Nurse

Investing.com – The dollar edged higher in early European trading Monday, with traders starting a fresh week in a cautious vein given last week’s turmoil in the equity markets.

At 3:05 AM ET (0805 GMT), the , which tracks the greenback against a basket of six other currencies, was up 0.1% at 90.575.

rose 0.1% at 104.72, fell 0.1% to 1.2125, while the risk-sensitive rose 0.2% at 0.7659.

Wall Street’s main equity indices suffered their worst week since the end of October last week as hedge funds were forced to liquidate positions to generate funds as retail traders ganged together to buy heavily-shorted stocks, such as GameStop (NYSE:) and AMC Entertainment (NYSE:). 

Although some of this pressure seems to have eased early Monday, foreign exchange traders are still wary of this war erupting once more. Throw in disagreements on Capitol Hill over President Joe Biden’s proposed $1.9 trillion Covid relief bill and delays to global vaccine rollouts and foreign exchange traders are happy to remain in the dollar safe haven, and least for now.

“An unusual driver of risk appetite in the past few days has been the retail-trading-induced high volatility in some stocks and the following trading restrictions by online platform Robinhood. That surely remains one thread to follow, and might keep investors jittery for a little longer, suggesting fresh defensive dollar positions may not be unwound just yet,” said analysts at ING, in a research note.

Risk sentiment had been buoyed for many weeks after President Biden, in one of his first acts on taking office, proposed a $1.9 trillion Covid relief package. However, this bill is struggling to make its way through Congress, and a group of 10 Republican senators sent him a letter on Sunday, urging him to consider a proposal.

Additionally, the EU and the U.K. had a on Friday over the supply of Covid-19 vaccines to the continent, which at one point threatened to create a border between Northern Ireland, which is in the U.K., and EU member Ireland.  

The slow rollout of vaccines in the EU has weighed on the single currency of late, with down 0.1% at 1.2127. 

Additionally, German plunged far more than expected in December, slumping 9.6% on the month in real terms, as tightened lockdown measures choked consumer spending in Europe’s largest economy

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





Source link

Leave a Reply

Your email address will not be published. Required fields are marked *