The Dollar weakens as economic data improve

By Peter Nurse

The dollar was slightly lower Friday in the european exchanges, the volumes have been impacted by the american holiday and the traders having to weigh the influences of conflicting economic data are positive and the increasing number of cases of coronavirus.

At 10: 30, the dollar index, which tracks the greenback against a basket of six other currencies, fell 0.1% to 97,203.

The EUR/USD remained stable at 1,1240, the GBP/USD rose 0.1% to 1,2477, while the USD/JPY remained stable at 107,50.

The economic data released earlier Friday showed a rapid recovery in the services sector of the chinese, with the index Caixin directors for the purchase of services that has reached 58,4 in June, the highest level in two months. This contributed to the 0.1% decline in the USD/CNY to 7,0606.

The United States has registered on Thursday an addition of 4.8 million jobs in June and manufacturing activity has rebounded more than forecast, signs of economic suggest that the vast sums of money injected by monetary and fiscal authorities around the world are bearing fruit.

“The printing of money the Fed has now provided what appears to be a negative correlation stable between risk assets and the dollar”, said analysts at ING (AS:INGA), in a research note.

“As long as the Fed continues to buy assets and is ready to do more, we expect that this negative correlation, Risk On, Dollar Off, dominates the financial markets in the coming quarters. Economies are recovering slowly on foot, this should mean a downtrend benign of the dollar in the second half”.

A new surge in infections with the coronavirus threatens to constrain a time of more economic activity.

The United States recorded more than 52 000 new cases Thursday, a little less than their record daily, the Florida in cash alone more than 10,000. The United States accounts for about a quarter of the 10.8 million cases of coronavirus recorded in the world.

More than three dozen u.s. States have seen an increase in cases of Covid-19 from Thursday, which prompted them to delay and in some cases to reverse their plans to enable the reopening of shops and the resumption of activities.

The USD/INR rose 0.2% to 74,872, the rupee just coming out of its highest level in more than three months. The indian currency has gained almost 1 against the dollar this week, helped by heavy capital inflows in a context where it is expected that the central bank will slow its purchases of dollars.

Last week, the balance of the Fed has decreased for a second consecutive week, because the volume of currency swaps with other central banks, is characteristic of the beginning of the crisis Covid-19 further reduced.

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