The US dollar on Friday rose against a basket of currencies as investors covered shorts and took profits after the biggest monthly decline in the currency in a decade.
The dollar index was down 4.1 percent for last month, its biggest monthly percentage fall since September 2010, with most of the drop seen in the past 10 days as new COVID-19 cases surged across several US states and data pointed to an economic recovery losing steam.
The New Taiwan dollar rose against the US dollar on Friday, gaining NT$0.019 to close at NT$29.502, up 0.18 percent from a week earlier. Turnover totaled US$848 million during the trading session. The greenback opened at NT$29.840, and moved between NT$29.281 and NT$29.550 before the close.
On Friday, the US dollar mostly held gains after data showed that US inflation-adjusted consumer spending has pulled out of April’s deep hole, but remains below its pre-pandemic level, and the currency strengthened as the session wore on.
After sliding to as low as 92.539, the lowest since May 2018, the US dollar index was last up 0.6 percent at 93.377.
“You had the dollar enter into a very serious decline over the month,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York. “Interest rates are going down, and that makes the dollar much less attractive as a yield play, but [also] the market is starting to become aware of the political risk of the dollar.”
“Today, we’re just seeing a little bit of short covering, and a little bit of risk off always creates flows into the dollar,” Schlossberg said.
On Thursday, confidence in the US dollar was undermined after US President Donald Trump raised the possibility of delaying the Nov. 3 presidential election.
The euro was at US$1.1781, dropping 0.57 percent on Friday and 1.07 percent for the week.
The currency was little moved by data showing the euro zone economy recorded its deepest contraction on record in the second quarter, while the bloc’s inflation unexpectedly ticked up last month.
The euro traded below US$1.10 as recently as May, but after EU leaders this month agreed to a 750 billion euro (US$883.5 billion) economic recovery fund — while also taking on debt jointly in a major boost to regional cooperation — many investors have warmed to the currency again.
On a trade-weighted basis, the euro is at its highest since 2014.
The US dollar’s drop this month has created space for a rebound in currencies hit hard in March, when investors rushed for the safety of the greenback as panic over the COVID-19 pandemic gripped markets.
Against the Japanese yen, the US dollar earlier hit a four-and-a-half-month low, but last stood at 105.84, up 1.06 percent. The British pound was at US$1.3085, down 0.08 percent on the day.
Additional reporting by staff writer with CNA
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