Currency Traders Liquidate their U.S Dollar Holdings for Riskier AssetsThe world’s safe-haven currency drifted lower at the first trading day of 2021 in London. The plunge in the U. S dollar index is partly attributed to a slew of improved Asian economic data bolstered riskier assets.
Also, the greenback’s value approached its two and half year low against emerged currencies like the Euro, British pound sterling,, Japanese Yen, Swedish Krona.
Economic reports released today revealing purchasing managers indexes from leading Asian economies printed gains for December, added pressure on the greenback.
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At the time of writing this report, the U.S Index lost about 0.27% to trade at 89.648 and not far from its 2-1/2 year low level of 89.515, sighted at last week’s trading session.
Currently, currency traders are shorting the dollar on the bias that global uncertainty is weakening and it’s likely we have a strong global growth recovery in 2021.
USD bulls for now will have to stay on the bench at least for the near term taking into account that it’s an era of ultra-low U.S. interest rates, massive quantitative easing programs enacted by global central banks, over bloated global debt market, and a belief that world trade will rebound strongly has rallied riskier currencies like the Chinese Yuan.
It’s critical to note the U.S index posted its first annual loss in three years coupled with the fact it has lost about 13% from a three-year peak hit at the height of the COVID-19 panic in March.
As seen in London’s trading session the plunge in the value of the safe-haven currency is most notable against the emerging markets FX complex, taking into account they are still relatively undervalued.
High hopes on COVID-19 Vaccines and reports revealing additional quantitative easing programs from the world’s largest economy has ramped up demand for risk assets and also weighed on the greenback
USD bears are taking hold of the US dollar, nudged on by risk on proclivities which sees the EURUSD pair trading back to the key resistance level at 1.2251.