U.S dollar gains ground as currency traders turn to safe-haven asset

The American dollar gained on Thursday at London’s trading session, with global investors and currency traders turning to the safe-haven asset, thereby reversing earlier losses recorded at Asia’s trading session.

The American Dollar Index, which monitors the U.S dollar against a basket of other currencies, gained 0.03% to trade at 96.067, 06.05 GMT.

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Quick fact: The U.S. Dollar Index tracks the American currency against a basket of other major currencies (like the Japanese yen, British pound sterling, Swedish Krona, Euro). Individuals hoping to meet foreign exchange payment obligations, via dollar transactions to countries like Europe, and Japan, would need to pay fewer dollars in meeting such obligations.

However, according to an analyst survey recently compiled by Bloomberg News, the U.S dollar index is expected to weaken by about 2% to 94.1 by the second quarter of next year. It traded around the 96 levels on Thursday.

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Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics, spoke on the greenback’s downside despite the surge in COVID-19 cases. He said:

“As for the US Fed policy, it looks like rates will be low for as far as the eye can see, and they will only raise rates when the whites of inflations eyes are visible.

“With the Fed providing ample liquidity, equities bid into every dip. The market is seemingly ignoring an increase in Covid-19 cases. It is making for a comfortable backdrop to stay short dollars.”