dollar, Safe-Haven Currencies rose against U.S. Dollar on Wednesday

The dollar and yen boosted, while the euro declined

The U.S. dollar held gains on January 18. The Japanese yen boosted as softening U.S. economic data, and increasing global COVID-19 cases kept investors cautious. Meanwhile, lockdowns and Italian political turmoil held the euro under pressure.

Notably, the euro declined to a six-week low of $1.2066 in Asia and dropped to a one-month low of 125.20 yen. Meanwhile, the yen was last up nearly 0.2% at 103.70 per dollar. It also increased the risk-sensitive Australian and New Zealand dollars.

The Antipodeans were weak against the U.S. dollar, and the Australian dollar reached a one-week trough of $0.7679. In contrast, the New Zealand dollar touched a three-week low of $0.7117.

Although Chinese economic data was better than expected and headed off further selling, it was not sufficient to change currency traders’ mood.

After Friday, data showed U.S. retail sales decline for a third straight month in December, the mood soured. Recovery is running into trouble as health authorities warned that the worst of the latest coronavirus wave is near.

Furthermore, it is not a secret that Europe is also facing surging COVID infections. Besides, the Italian government must survive crucial votes in parliament on Monday and Tuesday to cling to power.

Significantly, the American currency steadied after reaching a one-month high and last traded at 90.827. Besides, on Monday, the British pound settled at near a one-week low of $1.3567.

It is essential to note that many investors appear to be sticking in crowded dollar shorts, which reached a nearly 10-year high last week. However, bounce has carried the dollar index about 1.9% higher and lifted the euro more than 2% lower in two weeks.

President-elect Joe Biden plans to cancel permission for the Keystone XL pipeline

According to Moh Siong Sim, currency analyst at Bank of Singapore, the market is waiting and seeing mode. It’s debating about the greenback regarding whether higher U.S. yields could provide support or whether we see a further slump. He announced that the balance of risks is still in favor of a reflationary environment. Therefore risk sentiment should stay positive, and we should see a further dollar drop.

Moreover, the Canadian dollar declined by 0.2% after reports that President-elect Joe Biden plans to cancel permission for the Keystone XL pipeline. This project would link oil sands in Alberta to refineries in Texas.

During this week, Joe Biden is going to go through an inauguration in a heavily-guarded Washington. Notably, tensions were high after mob violence a few weeks ago.

According to the Wall Street Journal, Biden’s pick for Treasury Secretary, Janet Yellen, should rule out seeking a softer greenback when testifying on Capitol Hill on Tuesday.

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