Dollar gives back gains as US becomes most infected country in the world
We hope you and your family are all staying safe during these unprecedented times.
The USD has weakened off throughout this week as pressure on dollar funding reduced following a $2 trillion stimulus package from the US government. Further weakness in the USD was triggered by an alarming rate of new coronavirus cases in the US which has now rapidly overtaken China’s infection tally to become the worst affected country in the world.
To add to the Dollar’s woes, yesterday’s US jobless figures showed a huge surge which by far and away eclipses any level reached during the 2008/09 financial crisis and shows how significant the impact of Covid-19 is set to have. New claims for unemployment benefits rocketed up to 3.3million from just 282k a week before (so an almost 1100% week-on-week increase!)
As a result, the GBP/USD has recovered around 7-cents since Monday and trades back into the low 1.20s which is a 10-day high. The EUR/USD has moved around 3% higher since Monday and also trades at a 10-day high. The GBP/EUR has also moved higher and now sits around a 1-week high after rising around 4% this week.
Clearly the market is still extremely volatile and this looks set to remain. Developments surrounding the coronavirus saga will continue to dominant the FX rates and broader market risk sentiment.