Dollar Rises with Fed’s Lending Program
The dollar gained in Asian forex on Wednesday as the U.S. Federal Reserve began a massive new lending programme on Tuesday. However, stress from U.S. retail sales and industrial production figures weighed further on the dollar. The figures revealed the economic damage caused by the coronavirus-induced lockdowns.
U.S. President Donald Trump said that he planned to lift the lockdowns by May 1 as daily fatalities fall.
The U.S. Dollar Index slipped 0.03% to 98.91. In Asia, the USD/JPY pair fell 0.07% to 107.12 on Wednesday close to its lowest level in a month.
The USD/CNY pair rose 0.11% gain of 7.0525. Moreover, the GBP/USD pair slid 0.12% to 1.2607 near a five-week trough.
Down Under, the AUD/USD pair fell 0.43% to 0.6412 and the NZD/USD pair dropped 0.48% to 0.6075. Both are often traded as proxies for risk because of their close links to China and the global commodities trade.
The USD also briefly slipped to $1.0994 per euro, the lowest in two weeks.
Against the Swiss franc , the USD traded near a two-week low of 0.9597 another sign of improving risk sentiment.
The Dollar Nurses Losses
In the FX market, investors have returned to riskier currencies. The move followed after President Trump edged toward lifting some restrictions he previously ordered to contain the pandemic.
The currency also remains under pressure due to heavy measures by the Fed to boost dollar supply. Analysts say it’s too early for a full-scale retreat from safe-havens since the public health threat has not yet eliminated.
Trump said on Tuesday he would speak with governors of all 50 states. He planned to authorize them to open their economies in a timely manner.
Daily count on fatalities in the United States from COVID-19 has fallen sharply. With that, states are making plans to get businesses open again.
Investors are apprehensive as the president’s top infectious diseases advisor Anthony Fauci cautioned that the planned deadline was overly optimistic. Investors have been cautious in their moves.
Michael McCarthy, chief market strategist at CMC Markets said there’s been a flood of money from the Fed. It is the backdrop behind market moves, he said.
President Trump has made it clear he wants to lift restrictions, and this is what the market wants to hear. But we are nowhere near the all-clear when it comes to this virus, he added.
In more forex news, U.S. rail volumes for grain are facing ongoing headwinds in both the international and domestic markets.
Factors such as a strong U.S. dollar and competition from other grain-producing countries weighing on export-bound volumes. This is while the coronavirus pandemic is putting pressure on domestic volumes, according to grain industry observers.
