Gilead Sciences reported an encouraging update on a potential treatment for coronavirus. So stocks surged following this. On Wednesday, the dollar fell. The novel coronavirus battered the global economy and shut down businesses.
Experimental antiviral drug remdesivir of Gilead helped to improve symptoms in COVID-19 patients. They were given the drug earlier than those who were treated later, claims the company. As optimism is growing, it also is a given that businesses globally will get close to reopening. Thus, it has boosted the appetite of risk and reduced demand for the United States currency.
Joe Manimbo is a senior market analyst at Western Business Solutions in Washington. He said that we see an increase in chatter about economies opening across the world. Thus, this is suggesting that a global economic reboot can happen sooner rather than later. That is a positive and negative risk for safe-haven assets.
The Dollar against a Basket of Currencies
Against a basket of currencies, the greenback fell 0.26% to 99.62. It was above a two-week low of 99.44 hits on Tuesday. The Australian dollar is seen as a proxy for global growth. Thus, it jumped 0.57% to $06527. The highest since March 10, at which it reached $0.6547.
Moreover, after data showed that the United States economy contracted in the first quarter, the greenback also dipped. The Commerce Department made a statement. It said that the GDP (gross domestic product) fell at a 4.8% annualized rate in the January-to-March period. This happened after expansion in the final three months of 2019 at a rate of 2.1%.
The United States dollar’s reaction was tremendous. Nevertheless, Manimbo thinks it is going to pour cold water over hopes of a V-shape recovery. Moreover, he also feels that it will validate fears that second-quarter growth can be in line with some of the more dire forecasts of a 40% contraction. Later on Wednesday, the Federal Reserve will conclude its two-day meeting.
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