USD Continues to Climb near Multi-Month Highs on Covid Fears

On Wednesday, July 21, the USD continued to climb higher near multi-month highs. This is largely due to fears of the surging Covid-19 delta variant infections.

The Dollar Index, which trails the greenback in opposition to its six other rival currencies, gained 0.07% or 0.061 points to 93.040.

Since mid-June, the index was up by 2.80%, which is also likely to reach its peak of 93.439 level last March 2021.

Meanwhile, according to the U.S. Centers for Disease Control and Prevention, Covid-19 deaths have averaged 239 per day over the past weeks, which is 48% higher than the previous one.

In addition, the majority of these cases were due to the highly contagious delta strain, which was first found in India earlier this year.

Since early April, EUR/USD was around its lowest level as it fell 0.04% or 0.005 points to 1.1776.

Traders are eyeing the European Central Bank’s two-day meeting that will start on Wednesday after the ECB changed its inflation target to 2.00 earlier this month.

Likewise, the GBP/USD pair plummeted 0.20% to 1.3594 as it fell to its levels from February.

This is due to the surging of coronavirus infections caused by the lifting of restrictions last July 19.

Consequently, the USD/CAD also fell 0.05% or 0.0006 points to 1.2677.

On the other hand, the USD/JPY pair traded 0.19% or 0.20 points higher to 110.06.

Earlier in the day, Japan’s trade data was released where exports grew 48.6% year over year and imports increased 32.7% year-on-year in June.

Also, the SEK/USD increased 0.09% or 0.0001 points to 0.1151.

Swiss Franc Up

Moreover, the Swiss franc was up as USD/CHF traded 0.03% or 0.0003 points higher to 0.9220.

Last month, the franc sharply fell 2.94% as the USD/CHF pair began the month below the 90 levels.

Furthermore, the Swiss National Bank ensured that the currency will not sharply rise to avoid harming  the economy, which is highly dependent on exports and tourism.

An analyst said that the central bank did not hesitate to step into the currency markets to curb the value of the franc last 2020 when it sold 110 billion francs.

Based on a strategy review, the inflation rate climbed 2.00%. Another analyst stated that the central bank would accept a transitory period where inflation is moderately above its goal.

He added that these changes may be incorporated into the bank’s guidance and expects how the market will react to these moves.