Dollar Surges in Asia as Oil Prices Jump
The dollar strengthened in Asia as oil prices fell on Friday following a U.S. – mediated truce. U.S. Crude Oil WTI Futures jumped close to 25% in the last session.
In a Tweet, President Trump informed that Saudi Arabia and Russia had agreed to a cut of 10 million barrels. The two producers may even agree to a cut of substantially more than that.
In FX trading, the U.S. Dollar Index gained 0.04% to 100.31, while the USD/JPY pair was up 0.01% to 107.92. Japanese bank Nomura said it expects the world economy to contract by 18% in the first quarter on an annualized basis. Moreover, it is set to shrink about 4% this year.
The AUD/USD pair rose 0.09% to 0.6065 while the NZD/USD pair slid 0.12% to 0.5909. Joe Capurso, Commonwealth Bank of Australia analyst, said the U.S. labor market has more or less collapsed.
He said the increase in the USD due to the poor U.S. economic data reflects the currency’s status. It is a counter-cyclical currency that lifts when the global economy deteriorates. Even if the deterioration in the global economy is the U.S., Capurso added.
Moreover, the USD/CNY pair rose 0.1% of 7.0890, and the GBP/USD pair slid 0.14% to 1.2374.
Dollar Strengths Consolidate in Forex
The dollar edged almost an 2% weekly rise today because of a surge in the oil price. In addition, investors have sought safety by rushing to the safe-haven currency amid the worsening economic fallout.
The gains from the boosts consolidate the strength of the currency after a messy end to last month. Last month’s end had the safe-haven currency soaring in a scramble for cash. The greenback then slumped as the U.S. Federal Reserve flooded the market with liquidity.
The largest daily gain in oil prices helped the currency to its best day in two weeks against the euro. It stood at $1.0838 per euro on Friday, ahead 2.7% for the week.
The USD rose 1.8% for the week at 100.210 which is its best performance since mid-March.
Asian Forex news reports no sharp movement in the trade as Asians await bad news when U.S. payrolls data is published.
Meanwhile, the coronavirus pandemic has worsened severely in the United States. The government has extended lockdowns and weekly jobless claims already soared to a massive 6.6 million as of last week.
COVID-19 cases surpassed 1 million on Thursday, with more than 52,000 deaths as it spread further in the U.S. The death toll also climbed in Spain and Italy.
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