By Peter Nurse
The dollar has pushed higher early in the day on Friday, helped by its safe haven status while cases of coronavirus have continued to increase in the United States and that the unemployment data have indicated a slow recovery of the labour market.
Has 10.55, the dollar index, which tracks the greenback against a basket of six other currencies, rose 0.3% to 96,915. The GBP/USD was down 0.2% at 1,2580, while the USD/JPY was down 0.3% to 106,84.
The number of cases of coronavirus in the United States, the engine of the global economy, continues to grow, with more than 60 000 new infections in Covid-19 reported on Thursday.
With populous States such as California, Florida and Texas who have recently broken records and who need to resume some of the measures of social distancing, the hopes of an economic recovery aggressive vanish.
The number of Americans seeking unemployment benefits fell more than expected last week, according to data from Thursday, but the figure has remained above one million for the sixteenth consecutive week. Continuing applications are also remained above 18 million, which suggests that the labour market would be years in recovering from the pandemic.
However, if the dollar rose Friday against the euro – EUR/USD fell 0.2% to 1,1263 – it is still a little lower against the single currency since the beginning of the year. And further losses seem likely.
“The recent virus problems in the United States pose a significant risk to the u.s. recovery in the coming months, while the recovery in the services sector in the euro area is expected to continue, unless a second wave of the virus during the period of a european vacation,” said the analysts of the Danske Bank, in a research note.
The Danske Bank believes that EUR/USD is expected to reach 1.15 in over a period of three months.
Adding to the sense of recovery in europe, French industrial production rose strongly in may, 19.6%, thanks to the easing of the restraint and the reopening of factories.
Attention will now turn to the meeting of european leaders next week, to see if it is possible to reach an agreement for the distribution of stimulus funds proposed to be € 750 billion to the economies most adversely affected by the Covid-19 in the region, although it is also interesting to examine the credit rating of Fitch for Italy.
“The question is, if Fitch decides to be hard and degrade the score of the Italy. We believe that it will be held in abeyance given that the ECB and the EU show strong support to Italy through the quantitative easing and stimulus money expected,” said Danske Bank.
The currency antipodes are related to the risk have abandoned their gains of the previous day, the AUD/USD pair has fallen from 0.5% to 0,6932 and the pair NZD/USD, 0.12 % to 0,6555, while the pair USD/CNY has gained 0.3% to 7,0115.