Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Dollar rises as stock slump rattles investor confidence

ForexJan 28, 2021 02:45
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. U.S. dollar notes are seen at a Kasikornbank in Bangkok

By Stanley White

TOKYO (Reuters) - The dollar extended gains against most currencies on Thursday as a stock market rout due to concerns about excessive valuations boosted safe-harbour demand for the U.S. currency.

The euro nursed losses after a European Central Bank member warned that interest rate cuts are possible to curb the common currency's recent gains.

The Australian and New Zealand dollars, two currencies considered a barometer of risk appetite, also fell against their U.S. counterpart in a sign of waning market confidence.

Concerns about a short-squeeze among hedge funds, worries about corporate earnings, and delays in coronavirus vaccinations have slammed the brakes on a heady rally in global equities, which could continue to lift the dollar in the short term.

"Risk aversion supporting the dollar is a healthy correction after a one-way rise in risk assets," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

"The base scenario of economic acceleration in the second half of the year remains intact. The Aussie will recover but the euro will struggle."

The dollar edged up to 104.29 yen following a 0.4% gain on Wednesday.

Against the euro, the dollar stood at $1.2102, close to a one-week high.

The British pound fell for a second consecutive session to $1.3675.

The dollar index stood at 90.679, holding onto a 0.6% gain on Wednesday.

Many Asian bourses skidded by more than 1% on Thursday after U.S. stocks suffered their biggest one-day percentage drop in three months on Wednesday.

In addition to concerns about corporate earnings and the economic outlook, worries that hedge funds squeezed out of short positions in GameStop Corp (NYSE:GME) and similar companies will take profits on other assets also fuelled risk aversion.

The U.S. Federal Reserve kept monetary policy unchanged as expected on Wednesday but did signal some concern about the pace of economic recovery, which some traders said is another negative factor.

U.S. gross domestic product data is due later on Thursday to gauge the strength of the world's largest economy as it struggles with the coronavirus pandemic.

The onshore yuan fell to a one-week low of 6.4946 per dollar and other Asian currencies also fell against the dollar, highlighting broad strength in the greenback.

The Australian dollar fell to $0.7647, while the New Zealand dollar slid to $0.7147 as investors sold currencies with close ties to the global commodities trade to trim riskier positions.

Dollar rises as stock slump rattles investor confidence
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email