The dollar moved higher today, snapping a seven week-long losing streak. It was supported by stronger jobs data and global currency market demand for safe havens while there are concerns regarding COVID-19 recovery.
Dollar Drifts Higher
In the Asian session, early moves were modest since traders were waiting for data from Chinese trade, which was due at about 0200GMT. The positive sentiments about the dollar are because of the expected increase in industrial output as well as good recovery in retail sales.
The dollar also traded strongly against New Zealand and Australian dollars, which are more risk-sensitive. Another reason for the strong performance of the dollar is the subdued Australian dollar because of the testimony by the central bank governor that economic recovery will take more time.
Similarly, the New Zealand dollar was also under pressure due to the fresh outbreak of coronavirus cases.
Imre Speizer, the FX analyst at Westpac, said that it is clear that there is a slow down in the risk sentiment, but it is way too early right now to comment that downtrend we were witnessing is over.
The Positive Indicators
Presently, there is a drop in the weekly unemployment benefit applications. Such applications dropped under 1 million ever since the pandemic started and there were 9,63,000 claims compared to the expected 1.1 million unemployment benefit claims.
However, there is still a long way to go as about thirty million people in the U.S. are presently unemployed and the aid package aimed at keeping the stimulus flowing got stalled. However, due to the positive sentiments in the economy dollar has been able to slow down a slide that took it down by 9.5 percent from where it was in March.