The Dollar Rises on Mounting Covid-19 Cases
The dollar has come back into favor in early European forex trading on Thursday. There were concerns about the mounting coronavirus cases and its impact on economic recovery. It is now prompting a return to the safe haven.
At 3 AM ET (0700 GMT), the dollar index was up 0.2% at 97.293.
EUR/USD was down 0.1% to 1.1239 in forex. Moreover, GBP/USD fell 0.1% to 1.2410, while USD/JPY rose 0.1% at 107.15.
A sharp increase in the number of Covid-19 cases in many U.S. states prompted traders to seek the greenback. This was amid concerns a second wave of infections could trigger fresh lockdown measures.
In New York, New Jersey, and Connecticut, visitors from states with high rates of infections will have to self-isolate. That will be for 14 days.
Analysts at Danske Bank said it will now be crucial to keep an eye on the rising number of hospitalizations. This can determine whether new extensive lockdowns will have to be in place. Reopenings may have to stall for longer.
Numbers Matter to the Dollar
Eyes will be focusing on the weekly unemployment numbers. Analysts expect the jobless claims for the week ending in June 21 to be 1.3 million. Moreover, continuing jobless claims will likely fall to 19.9 million.
These numbers would represent progress, but unemployment is still at post World War II highs.
Elsewhere, US Dollar/Canadian Dollar was up 0.1% to 1.3649 in the FX markets. This was after Fitch downgraded Canada’s long-term foreign currency debt rating to AA+ from AAA. It was the first treble-A rated nation to lose this prestigious mark since the start of the Covid-19 outbreak.
The rating agency mentioned a bigger general government deficit this year. Canada is set to emerge from the recession with much higher public debt ratios. This is with the spending needed to counteract a sharp fall in output in the wake of the virus.
Turkey’s central bank will be announcing its latest interest rate decision later Thursday. It is widely expected to cut its one-week repo rate once more, to 8.0% from 8.25%.
Turkey’s key interest rate was at 24% last year following a currency crash. The central bank has authorised nine straight rate decreases since then.
Meanwhile, forex news reports US Dollar/Turkish Lira traded at 6.8587, up 0.1%. It was some way off the all-time high of 7.27 from early May.
Investors expect the Bank of Mexico to cut its key rate by another 50 basis points at its policy meeting.
