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USD Surfs Safe-Haven Wave, Hits Biggest Surge Since March

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The dollar rose to fresh two-month highs on Friday, and it is set to shut the session away with its biggest weekly increase since March, underpinned by safe-haven momentum amid weaker-than-expected economic data and ongoing concerns about the economic fallout from a lack of further federal stimulus.

The U.S. dollar index, which steps the greenback against a basket that is trade-weighted of major currencies, rose by 0.05per cent, to 96.60.

The Commerce Department reported durable items purchases increased just 0.4% in August from the month that is prior missing economists’ forecasts of 1.5percent. A deeper look into the details from the report, however, were more positive compared to headline number suggests, though the pace of orders is unlikely to be sustained, Jefferies (NYSE:JEF) said.

“Sustaining this energy beyond Q3, however, will be very difficult. The financing environment is really supportive, but capacity that is low rates and election uncertainty will likely weigh on capex, at least in the near-term. Businesses typically ramp up investment when utilization rates are tightening. That’s clearly not the situation today; capacity utilization continues to be historically low at 71.4%, which is down 6.4 ppts compared to year that is last” Jefferies said in a note. The dollar rose to fresh two-month highs on Friday.

Elsewhere, the dollar had been also supported by weakness in the euro as well as the pound as a wave that is second of illness threatens further lockdowns in the EU and U.K.

EUR/USD fell 0.40%, to $1.1625, and GBPUSD fell 0.26percent, to $1.2715.

“the dollar that is US proving to be the market’s preferred safe-haven currency as European countries is hit by a second wave of herpes. But risks which can be political likely to limit its appreciation prospective,” Commerzbank (DE:CBKG) said.

Others, but, suggest there is still more upside for the greenback. “We estimate there is some room left for the USD to move greater in the weeks that are coming we look for several retests, calculated moves or Fibonacci levels become reached. The rally into the USD this month is seen as the start of the stretched position that is short and resolution of oversold momentum conditions,” Bank of America (NYSE:BAC) worldwide Research said.

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