US Dollar Spikes As Investors Flee Market Selloff, Seek Safe-Haven Shelter

The US dollar is rallying against most of its currency competitors to kick off the trading week. The greenback, which has cratered about 10% since peaking at 103.00, is extending its gains in September as investors flee the broader financial market selloff and seek shelter in a traditional safe-haven asset.

The rising number of new COVID-19 infections has eaten away at risk appetite. With the upcoming cold and flu season on the horizon, many investors are concerned that a resurgence could put a dent on the stock market rally, particularly among the stock benchmark indexes. The United States is approaching seven million confirmed cases and 200,000 deaths, and the country is experiencing an uptick in cases after witnessing a steep drop-off this month.
As the COVID-19 pandemic continues to spook markets, the equities arena is experiencing a sea of red ink. The Dow Jones Industrial Average fell more than 800 points, the S&P 500 shed 2.2%, and the Nasdaq Composite Index dropped 1.3%. The energy and metal commodities are also sliding: US crude plunged 4.2%, natural gas declined 10%, gold plunged $50, and silver cratered 10%.
Congress failing to reach another COVID-19 stimulus and relief package has also dampened the mood on the New York Stock Exchange. Although a $1.5 trillion blueprint is on the table, the federal government has yet to pass, approve, and sign the bill into law. This has led to worries about its broader implications for the stock market and overall economy.
The bond market is bleeding red ink. The benchmark 10-year Treasury decreased 2.3 basis points to 0.671%, the two-year note dipped 0.2 basis point to 0.137%, and the 30-year bond slipped 2.6 basis points to 1.426%.
All eyes will be on Federal Reserve Chair Jerome Powell’s testimony on Capitol Hill on Tuesday and Wednesday. The Federal Open Market Committee (FOMC) left interest rates unchanged at near-zero last week, and it pledged that it would keep rates low for a few more years. The US central bank also formalized the new inflation approach that would allow it to stay above the 2% target rate.
It has been quiet on the data front to start the trading week. This week, home sales and prices, purchasing managers’ index (PMI) readings, and durable goods orders will be released.
The USD/CAD currency pair rose 0.8% to 1.3312, from an opening of 1.3207, at 19:07 GMT on Monday. The EUR/USD plunged 0.63% to 1.1767, from an opening of 1.1840.
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Original from: www.earnforex.com