Dollar Holds Onto Safe Haven Crown Amid Oil’s Sharp Drop

By Gina Lee

Investing.com – The U.S. dollar was up on Wednesday morning as investors continued to flock to the greenback as the effects from the oil industry's journey into negative territory on Monday continue to reverberate.

© Reuters.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies rose a modest 0.02% to 100.395 by 11:34 AM ET (4:34 GMT) as investors flocked to the safe haven as oil prices struggled in their recovery from their drop into negative territory on Monday.

“The bears are certainly getting the upper hand,” said Chris Weston, head of research at Pepperstone, told CNBC. He added that it was hard to bet against the dollar in such a climate. 

The USD/JPY pair held at 107.75 as investors also turned to the safe-haven yen.

The AUD/USD pair gained 0.48% to 0.6310 and the NZD/USD pair rose 0.24% to 0.5970 as New Zealand’s governor raised the prospect of negative rates again the day before.

“The fall in commodity and equity prices is a signal market participants expect the world economy to remain weak for some time, even once the lockdowns are eased,” Commonwealth Bank of Australia FX analyst Joe Capurso told CNBC. 

“We expect the weak world economy to bear down on the Australian dollar and for the Aussie to oscillate around $0.6000 in coming months.

The USD/CNY pair lost 0.07% to 7.0866 and the GBP/USD pair slid 0.02% to 1.2290, continuing a two-week trough as Great Britain continues to digest a gloomy assessment of recovery prospects from Bank of England chief economist Andy Haldene.

This article was originally published on Investing.com

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