Dollar jumps to 6-week high ahead of Jerome Powell's testimony before Congress

The US dollar rose against a basket of currencies on Tuesday, to extend gains for the third straight day, and hit a 6-week high, attracting demand as the best alternative investment, amid renewed fears of a liquidity crunch due to the sharp sell-off in most global stock markets, and ahead of Fed Chair Jerome Powell's testimony before the US congress about the coronavirus economic impact.

The dollar index rose by 0.4% to the highest since August 12 at 93.89 points, after it opened at 93.55, and hit an intraday low of 93.47.

The US dollar gained more than 0.6% yesterday, and posted its second straight daily gain, and the largest gain since August 19, buoyed by increased demand.

The greenback shined as the best alternative investment due to growing concerns over that the global economy, after a surge in coronavirus infections in Europe and the US, and some countries considering re-imposing another public lockdown.

This led most of global stock markets to drop sharply, and renewed fears about a liquidity squeeze of the US dollar.

At 14:30 GMT, Federal Reserve Chair Jerome Powell is due testify before the House Financial Services Committee about the expected economic effects of the coronavirus pandemic

The testimony is expected to deliver insight about the US economic outlook, the future of US monetary policy, and the prospects for further monetary stimulus.

Bearing in mind that Powell unveiled a historic shift in US monetary policy at the Jackson Hole Economic Symposium that is aimed at allowing inflation to run above the Fed’s previous target to support the economic recovery from the coronavirus impact.