By Peter Nurse
The dollar was put on hold Tuesday, the risk sentiment being bolstered by new evidence that the virus has reached its peak in some countries in Europe, while the United States has also seen evidence scattered improvement.
Has 12: 10 pm, the u.s. dollar index, which tracks the greenback against a basket of six other currencies, was $ 100,085, down 0.7%, while the loonie, Aussie and kiwi were all about 1%. USD/JPY has declined 0.1% to 109,12, while EUR/USD rose 0.9% to 1,0888. GBP/USD rose 0.7% to 1,2309, even as the Prime minister Boris Johnson was transferred to the intensive care unit because of worsening of her symptoms of COVID-19.
The number of daily deaths in Spain fell Monday for the fourth day in a row, at 637, the lowest level since 24 march, while Italy has reported 525 deaths on Sunday, the lowest since march 19, (although deaths have increased again on Monday). In New York, the epicenter of the epidemic in the United States, governor Andrew Cuomo said on Monday that the mortality rate of the State was “effectively stable for the past two days”.
The euro is in the spotlight later, when the finance ministers of the eurozone will hold a teleconference to discuss financing strategies of the political response of the region to the virus. Various ideas and plans that compete for the attention, but the desire of Spain and Italy have “coronabonds” issued and guaranteed jointly risk to be rejected by Germany, the netherlands and other countries.
The oil price has become another factor influencing the strength of the dollar.
“The USD and oil have a relationship that is increasingly unequal, with american oil production, which is now a key element of the USD,” said Danske Bank in a research note.
In regards to Thursday’s meeting of major oil producers to discuss a reduction of the offer, “we believe that the risks are tilted towards a disappointment and we expect that the price of oil remains below$ 40 a barrel. This could contribute to the evolution of the USD/JPY to 106 in the short term,” said Danske.
By extension, “we believe generally that it is too early for that currencies linked to commodities are experiencing a strong recovery, even if the Norwegian krone remains an exception, in particular because of its budgetary support”, said Danske.
Has 12: 10 pm, USD/NOK has fallen from 2.2% to 10,1997, while the price of Brent has increased by 2.8% to 34,00$ per barrel.
The dollar has also lost ground against most emerging market currencies, the chinese yuan rose about half a percent.