Dollar Unchanged Amid Global Reopenings
The U.S. dollar was unchanged in European forex trading early Monday. FX investors weighed up the conflicting forces of dismal economic data,` and the gradual reopening of the globe’s economy.
The U.S. Dollar Index, stood at 99.785, up 0.02%, while EUR/USD was flat at 1.0843. Meanwhile, GBP/USD pushed 0.1% higher to 1.2420 and USD/JPY gained 0.4% to 107.12.
In Europe, shops and hair salons can now reopen in France.The country is set to emerge cautiously from one of Europe’s strictest lockdowns on Monday.
Parts of Europe in Denmark, Norway, Spain, Italy and Germany, have also started or are planning to lift lockdown measures.
The U.K. also has announced tentative plans to lessen social distancing measures. With that, Sterling has risen around 0.5% since Prime Minister Boris Johnson announced the measures on Sunday.
In California, Michigan, and Ohio, governments have taken steps to allow factories and some businesses to resume work.
Yet the number of unemployment claims in the U.S. has soared above 30 million last week since late March. Treasury Secretary Steven Mnuchin said the unemployment rate could already have reached 25%, not the 14.7% previously recorded.
Dollar Flat Amid Dismal Data
There’s little in terms of important economic releases due Monday on the global agenda to affect the dollar and forex. U.S. data on retail sales and Chinese numbers on industrial production and retail sales will come out this week.
This week’s attention may well turn on the EU Commission proposal on the EU Recovery Fund. The focus is being on the size and funding of the fund given the political difficulties surrounding their crisis response.
According to analysts at ING, they remain doubtful that much stimulus will come from a European program. The size of the Recovery Fund that the EU Commission has been mandated to put in place will remain limited.
Also, the European Central Bank officials talked up the possibility of more stimulus undeterred by the recent German court ruling. It questioned the legality of some of its monetary policy.
The central bank governor of France, Francois Villeroy de Galhau, said that the ECB would likely step up monetary stimulus. This is before long, given the deteriorating outlook for inflation and the ECB’s ‘total’ commitment to its inflation mandate.
He asserted that ‘in the very name of their mandate’, they will be able to go further.
Forex news reports that ECB board member Isabel Schnabel repeated similar sentiments.
Meanwhile, the dollar jumped against its rivals on Monday, led by a rise in the U.S. Treasury yields. Sentiment on risk turned positive amid efforts by governments to reopen their economies. Gains against the pound also lifted the U.S. currency.
