The US dollar on Friday gained ground 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 here.
While orders for key US capital goods increased more than expected last month, orders for durable goods — ranging from toasters to aircraft — which are meant to last three years or more, rose 0.4 percent after jumping 11.7 percent in July.
With so much for investors to feel uncertain about, J.B. 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 US dollar.
“The election and stimulus and the continued economic recovery, those three parts, if those are not working lock step, there very well could be a movement to the dollar as that flight to safety trade,” Mackenzie said.
Mackenzie is looking at factors such as the UK’s struggle to come up with a plan to exit the EU as an overseas factor that could also keep the US 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.
“Yesterday was a calmer more positive sentiment ... then this morning’s durable goods show that the pace of growth in the United States is very uneven,” said Juan Perez, senior currency trader and strategist at Tempus Inc.
Along with weaker US and overseas economic data and expectations, Perez said that US dollar demand was also boosted by Washington’s failure to create a stimulus package and concerns ahead of the US election.
Top Republicans on Thursday repudiated US President Donald Trump’s refusal to commit to a peaceful transfer of power after Trump said on Wednesday that he expects the election result to end up being settled by the Supreme Court.
“In times like that when the chaos and havoc and blurriness of the future is so intense and so dense, that’s when the dollar is going to rise once again,” Perez said. “Markets are always going to be afraid when a strong government does not give clarity about continuance, about stability.”
In Taipei, the New Taiwan dollar yesterday dropped against the greenback, shedding NT$0.001 to close at NT$29.276 on turnover of US$105.5 million, losing 0.43 percent from NT$29.152 a week earlier.
The US dollar index, which measures the greenback against a basket of major currencies, was last up 0.31 percent at 94.601 and was on track for its best weekly percentage gain since the week 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 US dollar at ￥105.60.
The euro had its largest weekly fall against the US dollar since early April. For the day the euro was down 0.40 percent at US$1.1627, after hitting a roughly two-month low.
The US dollar, in a six-day rally against the Swiss Franc, showed its biggest weekly rise also since early April against that currency.
Additional reporting by staff writer
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