Dollar rises but drops from multi-month highs

Published On: July 22, 2021Categories: Trading1.6 min read

The greenback dropped from multi-month highs, as strong earnings boosted global stocks and increased investor risk appetite

The dollar rose on Thursday morning in Asia but dropped from multi-month highs, as strong earnings boosted global stocks and increased investor risk appetite.

The U.S. Dollar Index rose 0.03% to 92.787 by 3:41 AM GMT.

The USD/JPY pair inched down 0.12% to 110.13, with Japanese markets shut for a holiday.

The AUD/USD pair dropped 0.06% to 0.7353, with the Australian dollar slightly higher from an eight-month low hit on Wednesday. The National Australia Bank (NAB) Quarterly Business Confidence index, released earlier in the day, was also a lower-than-expected 17.

The NZD/USD pair dropped 0.26% to 0.6951, while the USD/CNY pair edged up 0.01% to 6.4672.

The GBP/USD pair inched down 0.02% to 1.3707. The pound recovered from a five-and-a-half month low of $1.35725 hit on Tuesday, even as the number of coronavirus cases involving the Delta variant continues to rise in the U.K. and confusion remains over the lifting of restrictive measures in England.

Strong earnings have swept away Delta concerns in the U.S., weighing on haven currencies, National Australia Bank analyst Tapas Strickland said in a note. The consensus is that the Delta strain does not pose an immediate risk to the recovery, delaying reopening by three months at the most as countries ramp up vaccination drives in response, the note added.

The euro traded at $1.1789, jumping above Wednesday’s three-and-a-half-month low ahead of the European Central Bank (ECB)’s policy decision later in the day. ECB will implement changes to their strategy for the first time and is widely expected to maintain its dovish stance, which could weaken the euro over the medium term.

On balance, the ECB’s new inflation target suggests monetary policy will remain ultra‑accommodative for an even longer period of time, which will act as a headwind for the euro, Commonwealth Bank of Australia strategists Kim Mundy and Carol Kong wrote in a research note.

Indeed, we expect the ECB will be one of the last central banks under our coverage to tighten policy, the note added.

About the Author: Jonathan Adams

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