Fundamental Comment

Dollar hits four-month high, Fed Powell eyed

Dollar hits four month high while Fed Powell eyed

The U.S. dollar continued to strengthen its gains against a basket of major currencies during Tuesday’s trading, hitting a four-month high, with developments in the spread of the Chinese virus in addition to the positive economic data witnessed by the United States during the last period.

As of 08:01 GMT, the U.S dollar index, which measures the performance of six major currencies against the greenback, rose by 0.03 percent at 98.74, hitting the highest level since October 10, 2019 at 98.49.

The euro slipped against the greenback to $1.0911, while the greenback advanced against its Japanese counterpart by 0.16 percent at 109.92.

The dollar was up 0.07 percent against the pound sterling at $1.2904, in the same direction against the Swiss currency at 0.9784 francs.

Investors have turned to the US currency as a safe haven, as concerns about the Corona virus persisted, and the euro and sterling currencies have been hit by fears that their economy will be affected by the Corona virus, China's slowing economy and Brexit transition talks.

China's National Health Organization has reported 1016 deaths and more than 42,000 more infected with Corona virus so far.

Employees have begun to return to offices and factories in China as the Government eased some travel restrictions in the wake of the spread of the Chinese virus, but a large number of workplaces remain closed.

Positive US economic data, most recently the monthly jobs report, also make the greenback more attractive than other currencies.

The U.S. economy added 225,000 jobs in January, exceeding expectations of only 163,000 jobs, compared with 147,000 in the previous month after the data was adjusted, according to data released by the U.S. Bureau of Labor Statistics on Friday.

Meanwhile, Investors are awaiting the testimony of Federal Reserve Chairman Jerome Powell before the US Congress on Tuesday on the state of the economy.

Powell may give some clues about the Fed’s monetary policy without committing to a specific policy trajectory.

On Wednesday, Powell will testify on the Semiannual Monetary Policy Report before the Senate Banking Committee in Washington DC.

Share Article