Let us check the market. Michael Every is Rabobank’s global strategist. He said that major constituent pairs, such as euro-dollar and dollar-yen, skewed the index.
Every wrote that it is mainly a DXY story driven by risk-off trends in JP and risk-on in EUR. Thus, it is not a reflection of the broader USD weakness over the year. Every said that they see some recent excess wound back. So, the question is if this is temporary or not.
The Fed will gather on Tuesday and Wednesday. Their meeting might confirm recent hints concerning the benefits of an average inflation target. Thus, this would allow rates to stay lower for longer.
Against the dollar, safe-haven currencies were up. The Japanese yen traded at a four-month high at 105.575 in comparison to the dollar. Having reached a five-year high of 0.9167 overnight, the Swiss franc was up by around 0.2% at 0.91855.
Dollar and Others
European Union leaders agreed on a 750 billion-euro fiscal stimulus plan last week. Thus, the euro continued its ascent.
Fabio Panetta is the European Central Bank board member. He warned that the danger to the eurozone economy is not over yet.
Overnight, versus the dollar, the euro hit a high of $1.17255. This is its highest peak since September 2018. Nevertheless, it slipped back below $1.17 in early London trading.
It also has gotten lower in comparison to the Swedish and Norwegian crowns.
Even after a resurgence of COVID-19 infections in Asia, the riskier kiwi and aussie dollars also arose. On Monday, the state of Victoria in Australia reported the country’s highest daily increase. Thus, this prompted authorities to warn that the six-week local lockdown may be extended.
The New Zealand dollar was up by 0.4% at $0.6663, when against the declining dollar. The Australian dollar was at $0.7123.
The dollar index was down by 0.4%. Finally, the euro was up by 0.4% against the dollar.
This is the leading news of the market.