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Forex - Dollar Hits 22-Month Low Amid Recovery Concerns

ForexJul 24, 2020 03:08AM ET
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© Reuters.

By Peter Nurse

Investing.com - The dollar was in retreat in early European trade Friday, weighed by doubts about the strength of the U.S. economic recovery as the country struggles to curb the number of coronavirus cases.

 At 3:10 AM ET (0710 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.1% at 94.627, breaching the March low of 94.650 to reach levels not seen since late 2018, and on track for its worst week in a month.

USD/JPY was down 0.5% at 106.33, GBP/USD was down 0.1% at 1.2725, while EUR/USD was up 0.1% at 1.1610, having reached its highest since late 2018. The euro was higher across the board profiting from an apparent 'safe haven' bid after the creation of a 750 billion-euro recovery fund improved the short-term political risk outlook.

The U.S. reported its first rise in unemployment claims since March on Thursday, with 1.416 million Americans filing for unemployment claims over the last week. This came as some states rolled back reopenings because of the Covid-19 pandemic.

There appears to be no sign that the coronavirus is stopping its relentless march across America. The U.S. on Thursday surpassed 4 million officially recorded Covid-19 cases, a quarter of which have come in just the last 15 days.

Additionally, the next U.S. fiscal rescue package appears to be deadlocked in Congress while a month-end deadline looms as some unemployment benefits are due to expire.

“U.S. exceptionalism has eroded, with perhaps only one pillar still standing -- demand for big cap U.S. stocks,” said Stuart Simmons, senior portfolio manager at QIC, Bloomberg reported. “The U.S. no longer has a yield advantage, there’s no growth advantage with the recovery from the coronavirus likely to prove more challenging than other developed markets.” 

Helping limit the damage in the dollar Friday, and boosting the Japanese yen as a safe yen, was the continued friction between the globe’s two economic powers, the U.S. and China.

Earlier Friday China ordered the United States to close its consulate in the city of Chengdu on Friday, responding to a U.S. demand this week that China close its Houston consulate. 

“This situation has been a catalyst for a pause in the risk-on rally, but to start seeing a reversal we would likely need to see further escalation and above all evidence that trade relations will be impacted,” said analysts at ING, in a research note.

Later Friday, the Central Bank of Russia is due to meet and is expected to cut its key interest rate again, having been on hold for the past couple of months. The ruble was a shade lower against the dollar at 71.56.

 

Forex - Dollar Hits 22-Month Low Amid Recovery Concerns
 

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Comments (5)
অঘটঘটন Engulping
অঘটঘটন Engulping Jul 24, 2020 8:04AM ET
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I think US empire destroyed by COVID-19 and China's economy...... You can understand it's by looking gold market.
Jim Herndon
Jim Herndon Jul 24, 2020 7:05AM ET
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USD shoud continue fall. Fed printing fiat has no limits. Powell is petrified of the president. The market wants more stimulus and the unemployed love the extra spending money. We are in a mess. Precious metals a no brainer !
Ted Dirty
DirtyTed Jul 24, 2020 6:01AM ET
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Hey..."recovery hopes" and "corona concerns"...don't mix them up.
Patrick Lam
Patrick Lam Jul 24, 2020 4:11AM ET
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Buy USD, got bullish divergence
Noel Amparo
Noel Amparo Jul 24, 2020 3:35AM ET
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Recovery concerns or money printing concerns?
Million Dollar
Million Dollar Jul 24, 2020 3:35AM ET
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Yup
 
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