US dollar crashes to lowest level in almost three months

Young journalists club

News ID: 49481
Publish Date: 22:16 - 27 November 2020
Friday, 27 November 2020 (YJC) _ The US dollar index fell on Friday, hitting its lowest level in almost three months, after strong economic data from China favored commodity currencies over safe havens and equity markets continued their rally.

US dollar crashes to lowest level in almost three monthsThe dollar has fallen more than 2.2% so far this month as global market sentiment has surged following Joe Biden’s election victory and positive COVID-19 vaccine progress, which reduced demand for the safe-haven currency.

The Australian dollar hit its highest level since September after news that China’s industrial firms grew in October for a sixth consecutive month and at their quickest pace since early 2017, pointing to a steady recovery in the manufacturing sector after it was hard hit by the COVID-19 pandemic.

The British pound declined against the euro as the European Union and Britain said there were still substantial differences over a Brexit trade deal as the EU chief negotiator prepared to travel to London in a last-ditch attempt to avoid a tumultuous finale to the five-year Brexit crisis.

Along with China data and Brexit headlines, Erik Bregar, head of FX strategy at Exchange Bank of Canada in Toronto cited month-end selling of the U.S. dollar as investors look to balance portfolios after solid monthly gains for equities.

“There’s been talk all week that the U.S. dollar will see waves of selling going into Monday,” said Bregar who also noted “dollar selling into the London fix every day this week.”

Wall Street’s main indexes rose and the Nasdaq hit a record high as optimism around an economic rebound next year outweighed concerns around an expected surge in coronavirus infections following Thursday’s U.S. Thanksgiving holiday.

“The markets have a tendency to perhaps look through the fact that we’re going to have a really nasty Q4, possibly a very nasty Q1 too, in terms of economic data in Europe and the US, and look through to the better times ahead,” said Jane Foley, senior FX strategist at Rabobank.

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