Dollar jumps to 4-week high as week kicks off

The US dollar rose on Monday, extending its gains for the second straight day and hit a 4-week high, amid the market's risk-off sentiment due to concerns over the rising Covid-19 infections in most parts of the world, in addition to political tensions in Italy.

The dollar index rose more than 0.2% to the highest since December 21 at 90.95 points, after opening at 90.78, and hit a low of 90.71.

The index gained 0.5% on Friday, the second daily gain in 3 days, after the unveiling of a huge stimulus package in the US.

The greenback gained 0.7% last week, in its second straight weekly gain, and the largest weekly gain since late October.

The largest weekly gain in around 4 months came thanks to a jump by the US 10-year Treasury bonds yield above the 1% barrier for the first time since March 2010, and hit a 10-month high at 1.184%.

The US dollar shined as the best alternative investment, as the market's risk appetite dampened due to renewed concerns about the rising Covid-19 infections in most parts of the world, especially in China, the world's second largest economy.

China reported on Friday the largest daily increase in new Covid-19 cases in more than 10 months, especially after new infections in the northeastern Heilongjiang province tripled.

This spike is the equivalent to the number that led to imposing a full quarantine on more than 28 million people in Hubei province 8 months ago.

Most European countries are now under the strictest lockdown since the first coronavirus wave, especially after the UK identified the new Covid-19 strain.

As for Italy, political tensions are escalating as the fate of the current government is hinging on the results of Parliament's vote on Monday and Tuesday to continue in power.