The Dollar is quiet; the currencies at risk are affected

By Peter Nurse

The dollar remained largely unchanged at the start of the european session on Monday, but the currency sensitive to risk, as the dollars of australia and new zealand, have been hard hit by fears of a second wave of the virus Covid-19, and in particular in China.

Was 10.20 am, the dollar index, which tracks the greenback against a basket of six other currencies, rose slightly to 97,332. It has now rebounded by more than 1.5% from the low of last week. The USD/JPY has declined 0.1% to 107,25, while the EUR/USD fell 0.2% to 1,1235.

China has reported dozens of new cases of the virus Covid-19 in the course of the weekend, related to an important wholesale market for food in Beijing. Japan has also reported an outbreak of new cases in Tokyo, many of which have been attributed to night clubs and bars that had recently reopened.

If one adds to this a mini-surge of new cases of coronavirus in the United States, mainly in the south of the country, it is easy to understand why fears of a new epidemic that would cause more damage to the global economy multiply.

The AUD/USD was down 1 % to 0,6793 $, while the NZD/USD fell 0.6 % to 0,6405 $.

These two currencies are exchanged as indicators liquids in the sense of risk because of their close ties with the chinese economy and commodities in the world.

“If this engine continues to be the center of attention of the markets, we could see a new decline in risk sentiment positive in the last month, and, for example, to a strengthening of the us dollar”, said analysts of the Danske Bank in a note to clients.

The disappointing data on industrial production and retail sales in china for the month of may have not helped a lot of these currencies, while the USD/CNY has increased from 0.2% to 7,0975.

Industrial production has increased 4.4% year-on-year and retail sales fell 2.8% year-on-year.

The british pound is also widely weakened approaching a meeting between the british prime minister Boris Johnson, the president of the european Commission Ursula von der Leyen and president of the european Council, Charles Michel, to discuss the way forward in the negotiations on the Brexit.

A breakthrough in the stalled negotiations seems unlikely at this stage, and Boris Johnson has indicated that he does not wish to extend the period of trade negotiations beyond the end of the year.

In addition, the Bank of England should meet on Thursday and is expected to increase its quantitative easing program of about £ 100 billion, some projections predict increases even more important that the british economy is struggling to recover from the effects of the sars coronavirus. The OECD warned last week that the United Kingdom would be the most affected of the major world economies, in part because of the larger share of services in GDP.

The GBP/USD fell 0.6 % to 1,2468 and the EUR/GBP gained 0.4% to 0,9012.

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