Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Dollar flat in thin trade with Europe on holiday

Published 04/13/2020, 11:30 AM
Updated 04/13/2020, 11:35 AM
© Reuters. Illustration photo of a U.S. Dollar note

© Reuters. Illustration photo of a U.S. Dollar note

By Kate Duguid

NEW YORK (Reuters) - The U.S. dollar was roughly flat on Monday morning in North America, with trading volumes thin due to a holiday in Europe.

The dollar index (=USD), which measures the greenback against a basket of six rival currencies, was up 0.04%. Against the euro (EUR=), the dollar was 0.35% stronger at $1.090. Though the U.S. currency had earlier drifted higher against the Australian and New Zealand dollars, as the weekend's OPEC+ deal failed to soothe demand concerns, those trends had mostly reversed in mid-morning trade.

"The U.S. dollar ticked higher in the holiday-light trade. Gains against the euro and commodity currencies provided a general boost to the greenback, which was otherwise weaker against the yen and sterling," said Joe Manimbo, senior market analyst at Western Union Business Solutions.

Major oil producers agreed to the output cuts on Sunday to prop up oil markets as the pandemic severely curtailed global demand.

"Oil-exposed currencies were subdued despite OPEC's record production cuts of nearly 10 million barrels a day. The cartel hopes that the record agreement will help put a floor under oil prices. Still, the outlook remains troubled for oil markets given that the coronavirus has significantly damaged demand," said Manimbo.

Financial markets remain on edge over the spread of the novel coronavirus as severe restrictions on personal movement drag the global economy into a deep recession. However, a slower flow of news in the past few days has boosted risk assets modestly, and the dollar, which serves as a safe-haven asset, has drifted modestly lower.

The greenback has also been pressured in the last few weeks by Federal Reserve measures that have flooded the financial system with dollars to address a liquidity crunch caused in part by demand for the U.S. currency.

"The backdrop over the past week has been "no news is good news," which has boosted risk assets," said Mark McCormick (NYSE:MKC), global head of foreign exchange strategy at TD Securities.

© Reuters. Illustration photo of a U.S. Dollar note

"We don't expect this dynamic to last much longer," said McCormick. "As we leave the acute phase of the crisis, the market will have to deal with the underlying data and the uncertainty of the CV-19 exit strategies. The latter will be piecemeal and bumpy. It's a dance of fits and starts rather than a binary event of economy on/off. In turn, we expect another bump in the USD."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.