By Peter Nurse
The dollar is trading lower at the start of the european session on Wednesday, despite a jump in us yields before a massive sale of bonds and the hope that the pandemic of sars coronavirus is under control.
A 11: 50 a.m., the dollar index, which tracks the greenback against a basket of six other currencies, fell 0.1% to 93.502. The USD/JPY was up 0.3% to 106,78 and the EUR/USD was up 0.3% to 1,1772.
The performance of the u.s. debt over 10 years has reached its highest level in two months in the night, before a record auction of $ 38 billion.
The increase in yield is due to both the repositioning in anticipation of the large emissions of this week and the sense that the u.s. recovery is broadening and appears to be more robust, said Rodrigo Catril, strategist’s primary NAB to the exchange operations, in a Reuters report.
Recent reports have suggested a decrease in hospitalizations in the United States due to the Covid-19, giving them confidence in the fact that the pandemic is once again under control.
The GBP/USD has risen less than 0.1% 1,3052 after official figures showed that the british economy has experienced a record contraction of 20.4% between April and June, the sharpest contraction reported by a large economy to this day.
This means that the economy of the United Kingdom, the sixth in the world, is in a recession, its first since the financial crisis, because the previous quarter had also seen a contraction in the gross domestic production.
The losses of the pound have been minor, because it expected a sharp slowdown at the height of closures, and signs of recovery were observed during the single month of June, where the gross domestic product increased by 8.7% compared to may.
“The recession caused by the pandemic coronavirus has resulted in the largest drop in the quarterly GDP ever recorded,” said Jonathan Athow from the Office of national statistics.
“The economy has started to rebound in June… Despite this, the GDP in June is still a sixth below its level of February, before the virus strikes”.
From a technical point of view, the GBP/USD may continue to decline in the short term, although in the broader range of 1,2950/1,3160, according to the strategists of UOB Group.
“The dynamics of decline has started to improve, and the GBP might drift down to 1,3005. For today, a sustained decline below 1,3005 is not expected (the next support is at 1,2950)”.