U.S Dollar Correlates with Market Risk AppetiteThe greenback stayed relatively stable at most part of Wednesday morning in London. Though it seems currency traders are currently facing road bumps in going long as the safe-haven asset remained broadly weaker on the account that U.S Treasury yields have been drifting lower of late.
Such macro brought temporary relief to global investors’ exposure to risker markets particularly global equities, crypto got a significant amount of buying pressures.
Market risk appetite dynamics are currently the major drivers in the global currency market currently, as the U.S dollar index value reveals strong patterns around such bias.
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At the time of writing this report, the U.S. Dollar Index that gauges the greenback’s strength against a basket of other major currencies like the Euro, Japanese Yen, British pound sterling, Swedish Krona, Swiss Franc, and the Canadian dollar was trading between 90.733 – 90.873 index points.
In addition, it’s key to observe currency traders are correlating their positions on U.S Bonds that has caused some level of volatility in the market after U.S Treasury yields led a dramatic surge in yields globally during the past week.
Still, it’s fair to say that the bulls or the bears neither have a total grip on the U.S dollar has recent data from global equity markets suggest they are presently directionless after Monday gains, but USD bears seem to have the upper hand on macros presenting US yields easing and rowing back into consolidation, meaning there seems to be less demand for the greenback at least for the short term.
That being said, commodity-driven currencies like the Canadian and Australian dollar have added pressure on the U.S dollar because these emerged markets continue to punch higher domestic data thereby revealing faster-than-expected economic growth, and less need to hold the U.S dollar despite commodity prices plunging relatively.