Dollar Near a Week Low as Delta Worries Ease Ahead of Jackson Hole

The dollar hit its lowest level in nearly a week on Wednesday, August 25th against major counterparts, as concerns eased that the highly contagious delta strain of the Coronavirus may derail the global economic recovery.

Risk appetite has improved in global markets since the US Food and Drug Administration granted full approval for a vaccine against Covid-19, Pfizer-BioNTech, in a move that could speed up the pace of vaccinations in the United States.

The dollar index, which tracks the performance of the US currency against a basket of six competing currencies, rose by 0.07% to 92.981, after falling to 92.804 in the previous session for the first time since August 17.

The dollar rose until the beginning of this week, with the dollar index reaching a nine-and-a-half-month high at 93.734 on Friday, not only for fear of the economic impact of the Delta strain but also with the Federal Reserve hinting that a tapering is likely this year.

But with delta-induced uncertainty surrounding the outlook, expectations were dim that Fed Chairman Jerome Powell would indicate a timetable when he speaks at the Fed’s annual economic seminar in Jackson Hole on Friday.

The dollar was little changed at 109.695 yen, another safe-haven currency, near the average trading range since early July.

Against the euro, the dollar added about 0.1% to $1.17425, but it is still close to a one-week low of $1.17655 that it touched overnight.

Sterling fell 0.05%, after rising to $1.37475 on Tuesday for the first time since November 19.

The Australian dollar fell 0.2% to $0.72405, after touching a one-week high of $0.7271 in the previous session.