Forex Today: Fear fuels dollar’s demand

Here is what you need to know on Thursday, September 24:

The dollar’s rally continued, with the American currency reaching two-month highs against multiple high-yielding rivals. US data was mixed, although business activity remained in expansion territory in September, according to Markit. Nevertheless, concerns about global growth fueled demand for the safe-haven greenback.

US Federal Reserve Chief’s Jerome Powell and Treasury Secretary Mnuchin testified before Congress but added nothing new to what they said on Tuesday. They said that they are studying ways to provide additional support to small business without entering into details. Once again, policymakers urged lawmakers to support the economy.

The shared currency got extra pressure from Markit services PMIs as the indexes in several EU countries fell into contraction territory in September and according to preliminary estimates.

In the US, the House passed a stopgap federal funding bill, that would keep the federal government operating through Dec. 11. No news on the coronavirus aid-package.

The Pound temporarily rose on renewed Brexit hopes, as EU’s chief negotiator Michel Barnier said that the EU is determined to get a trade deal with the UK but will be firm. He added that the transition period ends on 31 December and that it cannot be extended.

Commodity-linked currencies were among the worst performers, with AUD/USD falling to the 0.7070 price zone, and the USD/CAD nearing 1.34 by the US close.

A fourth company, Johnson & Johnson has begun phase three trial testing of its potential coronavirus vaccine. The news spurred temporal optimism but was not enough to offset prevalent risk-off mood.

Wall Street opened with gains, following the lead of its European counterparts,  but ended the day with sharp losses, as concerns about economic growth weighed.

Gold plummeted, amid dollar’s strength and on-hold central banks. The bright metal settled at around $1,860.00 a troy ounce. Crude oil prices were undermined by falling equities, WTI settled at $39.40 a barrel.