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US dollar resumes its rally, showing strongest week since early April
THE dollar gained ground on Friday and measured its biggest weekly gain since early April as investors worried about a slowing economic recovery, rising Covid-19 infections in Europe, uncertainty about US stimulus, and the upcoming elections.
While orders for key US capital goods increased more than expected in August, orders for durable goods - ranging from toasters to aircraft that are meant to last three years or more - rose 0.4 per cent in August after jumping 11.7 per cent in July.
With so much for investors to feel uncertain about, JB Mackenzie, managing director of futures and forex at TD Ameritrade sees increasing volatility ahead of the Nov 3 US elections and as a result, more demand for the dollar. He is looking at factors such as Britain's struggle to come up with a plan to exit the European Union as an overseas factor that could also keep the dollar strong.
While the greenback fell slightly on Thursday, after four days of gains, as equities rose on hopes for stimulus, the US currency's rally resumed on Friday as worries resurfaced. The dollar index, which measures the greenback against a basket of major currencies, was last up 0.31 per cent at 94.601 and was on track for its best weekly percentage gain since the week in early April.
With five straight days of gains against Japan's yen, the greenback showed its strongest weekly gain versus the yen since early June. For the day, the yen was lower against the dollar at 105.60.
The euro had its largest weekly fall against the dollar since early April. The dollar, in a six-day rally against the Swiss Franc, showed its biggest weekly rise also since early April against that currency. For the day, the euro was down 0.40 per cent at US$1.1627, after hitting a roughly two-month low.
Riskier currencies fell, with the Australian dollar lower 0.28 per cent on the day and down around 3.6 per cent for the week in its biggest weekly decline since the week ended March 20. The New Zealand dollar declined 0.08 per cent against the greenback for the day but showing its biggest weekly dip since the week ended May 15. REUTERS