US Dollar Finds Support as CPI Rises, Risk Appetite Fades
Early on Wednesday, the US dollar continues to trade strong against its major peers amid rising worries about a delay in the development of a possible vaccine to tackle the coronavirus pandemic even as uncertainty about the next round of fiscal stimulus measures in the US strengthened its safe haven appeal. At the time of writing, the US dollar index DXY is trading around 93.56.
Analysts anticipate that the US dollar could remain supported as markets continue to focus on the economic impact of the pandemic even as several countries around the world reimpose restrictions, hampering recovery. In addition, latest news reports suggest that more stimulus initiatives are likely to be announced only after the presidential elections on November 3, keeping the dollar strong at least until then.
The risk sentiment in global markets took a hit after Johnson & Johnson announced its decision to put its clinical trial of a possible COVID-19 vaccine on hold after a patient fell ill. The mood in the markets was further impacted after Eli Lilly also stated that it had paused its antibody treatment for the coronavirus.
Meanwhile, other leading currencies like the Euro and the GBP are under pressure as the economies of Europe and Britain are expected to be impacted by the fresh restrictions imposed due to a resurgence in the number of cases. The AUD is also expected to weaken further after losing around 1% of its value against the US dollar due to a dispute with China on the issue of coal imports.
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