Dollar Stays Strong as Virus Cases Grow
The dollar has maintained its strong tone in early European forex trading on Friday. Traders were seeking out the safe haven as the number of coronavirus cases in the U.S. continued to grow.
At 3:10 AM ET (0710 GMT), the dollar index rose 0.1% at 97.420.
Analysts at ING said that data is likely to play second fiddle to the virus headlines. Investors are likely to remain rather jittery today, with the balance of risks for pro-cyclical assets tilted to the downside. The dollar may remain supported on safe-haven bids.
Economic data pointed to an economic recovery in the U.S. on Thursday. This was with another small drop in jobless claims and a substantial rise in durable goods orders. Friday showed spending data as well as the Michigan sentiment numbers.
This has tended to be overshadowed by news of a record number of new coronavirus cases throughout the U.S. The state health departments reported a total of over 37,000 new cases on Thursday.
ING added that there is a growing concern that new restrictive measures will be deployed. “In turn, while we maintain a positive medium-term view on risk assets, it will mostly be about infection numbers.” This drives sentiment in the short-term.
The Second Virus Wave and the Dollar
With that said, the second virus wave no longer appears to be a U.S.-only problem. The development in EM/developing countries continues to be problematic for their recoveries, including in tourism.
Analysts at Danske Bank said it is hard to see things get much better until they get to a vaccine. That is so far still on track to arrive within 6-9 months.
Meanwhile, the first round of the presidential election shall take place in Poland on Sunday.
Incumbent president Andrezej Duda, from the government party, is the favorite for a win. But if he doesn’t get a majority, there will be a second round in two weeks’ time. This would be likely against the main opposition candidate, Rafal Trzaskowski, from the pro-market reform party civic platform.
Should Trzaskowski surprise the nation and win, it could be positive for sentiment toward Polish assets including PLN, according to Danske Bank.
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