NEW YORK: The US dollar rose on Tuesday to a one-week peak, on track for its largest single daily gain in about two weeks, as new coronavirus outbreaks threatened to derail a global economic recovery with the Australian dollar and the British pound leading losses. A decline in risk appetite benefits the dollar as a safe haven.
In late morning trading in New York, the dollar index, a gauge of its value against six major rivals, rose 0.6% to 92.124, on course for its biggest percentage gain since mid-June. The greenback's correlation with general risk appetite as seen from the global daily case loads of Covid-19 has weakened in recent weeks as market attention has been more focused on when the Fed will exit its massive policy stimulus. But that correlation has started to strengthen since last week.
The euro declined 0.3% to $1.1892, edging back toward the 2-1/2-month low of $1.1847 touched on June 18. Elsewhere, sterling slipped back toward a two-month low, weakening 0.4% to $1.3825. The Australian dollar, seen as a liquid proxy for risk appetite, fell 0.6% to US$0.7520 amid concerns over renewed Covid-19 lockdowns across parts of the country.