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Dollar Up After Grim Fed Warning on COVID-19 Recovery

Published 05/21/2020, 12:17 AM
Updated 05/21/2020, 12:22 AM
© Reuters.

© Reuters.

By Gina Lee

Investing.com – The dollar was up on Thursday morning in Asia, gaining back some of its losses from earlier in the session.

Earlier, positive investor sentiment about the global economic recovery from the COVID-19 virus soured as investors digested a grim report from the U.S. Federal Reserve as it released its Federal Open Market Committee meeting minutes overnight.

The minutes warned that the COVID-19 virus posed both a severe economic threat and a risk to financial stability, but also hinted at more stimulus measures for economic recovery.

“Almost everywhere, policy makers are continuing to stress that whatever resources are required will be made available,” ANZ analysts said in a note.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies slipped 0.24% to 99.370, just under the $100 mark, by 12:07 AM ET (5:07 AM GMT).

The USD/JPY pair was up 0.11% to 107.62. Japan’s Ministry of Finance said that the country’s April exports took a 21.9% dive year-on-year. Analyst forecasts prepared by Investing.com predicted a 22.7% drop.

The AUD/USD pair slid 0.54% to 0.6562 and the NZD/USD pair dropped 0.29% to 0.6124.

The Antipodean currencies could not hold onto their gains from bullish overnight trades that saw the AUD hit a ten-week high and the NZD see a 10-day high.

The USD/CNY pair was up 0.18% to 7.1056, even after a fresh aim from the U.S. at China’s handling of COVID-19 overnight.

U.S. Secretary of State Mike Pompeo said that the $2 billion pledged by Beijing to fight the virus is “paltry compared to the cost that they have imposed on the world.”

Meanwhile, Chinese relations with both the U.S. and Australia continue to simmer in the background as the two countries join a growing group looking to probe the origins of COVID-19 and China's handling of the virus.

The GBP/USD pair dropped 0.32% to 1.2200 after the release of inflation data fueling continuous speculation that the Bank of England would introduce negative rates.

”[The data] keeps the debate about negative rates alive and kicking,” Kit Juckes, macro strategist at Societe Generale (OTC:SCGLY), told CNBC.

“Poor old sterling. There is clearly a better case for shorts in sterling/yen than euro/yen now, and even more so in being short sterling/Aussie as well as sterling/yen, give the slight risk-on bias and the move higher in resource prices.”

Latest comments

I'm hoping President Elect Biden chooses a new Fed or even Bernanke. We need the Senate and House Democrats to bring unity.Biden/Stacy Abrams or Harris
Sleepy Joe ....Too Funny.
They already lost their face, and that's serious for Chinese
China will never allow an inquiry even if there is no cover up. They will lose face if international organizations do an investigation. Also they probably have a lot to cover up.
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