The Dollar weakens in the face of signs of economic growth

By Peter Nurse

The dollar weakened at the beginning of the european session on Wednesday, traders looking for currencies to be more risky, clinging more to the signs of economic growth to the increasing number of cases of coronavirus.

At 10.20 a.m., the dollar index, which tracks the greenback against a basket of six other currencies, fell 0.1 % to 96,595, against a peak of 97,719 in the beginning of the week.

The EUR/USD rose 0.1 % to 1,1322, after having reached a level as low as 1,1167 Monday, while the USD/JPY has risen 0.1 % to 106,60, after the lowest of six weeks to 106,06 reached earlier this week.

These movements took place after the publication of data PMI better than expected on Tuesday in Europe, the United Kingdom and the United States, which has climbed back up the moral.

“The increase in PMI global has been a key factor in the jump of the EUR/USD to 1,1330”, said the analysts of the Danske Bank. “These indices continue to suggest that the surprises in the macroeconomic are positive (starting with the american jobs some time ago). In our opinion, the positive surprises will be enough to propel the weakness of the us dollar for some time yet, even if the positioning data suggest that the speculators of the euro are almost out of breath. We expect 1.15 to the horizon of three months”.

It is also necessary to take account of the virus Covid-19, the number of cases increases around the world, including several States in the u.s. register of records of infection.

“The dollar and risk sentiment will likely remain negatively correlated, unless the United States does not show clear leadership and sustainable in the global economic recovery, which is difficult to reconcile with the dark new american on the Covid-19,” said Ray Attrill, head of exchange-rate strategy at NAB, according to Reuters.

The pound sterling has struggled to record gains against the dollar, because the british government was concerned that an excessively rapid opening up of the economy.

On Tuesday, Prime minister Boris Johnson has announced that the pubs, restaurants, cinemas and hairdressers in England will be able to reopen from the 4th of July. The four countries that make up the United Kingdom are regulated separately in terms of health.

However, the chief scientific adviser to the government, Sir Patrick Vallance, and chief medical officer for England, professor Chris Whitty, both stressed that the plan of Johnson was not “without risk”.

A number of influential leaders of the health sector have signed an open letter published in the British Medical Journal on Wednesday, warning that the Uk faces a “real risk” of a second wave of sars coronavirus.

At 10.20 am, the GBP/USD fell 0.1 % to 1,2513 and the EUR/GBP is up 0.2 % to 0,9046.

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