After the worst week since 2009, dollar rebounds. Pandemic fears are keeping forex markets jittery. Month-end flows might support the dollar, analysts are saying. After China cuts the rate of interbank, offshore yuan becomes weaker.
Investors braced for prolonged uncertainty. To fight the coronavirus, governments tightened lockdowns. Thus, on Monday, the dollar snapped a week of declines. Moreover, it rallied against major currencies and riskier emerging markets.
After the Chinese central bank cut a key interbank interest rate, China’s offshore yuan fell.
In London trading, the Aussie dollar, sterling, and euro were all down 0.5% to 1%. It brought an end to recent rebounds. The rebounds came after the Federal Reserve’s efforts to calm the rush to own the United States currency earlier this month.
Concern about the economic impact of shutdowns and the spreading coronavirus continued to dominate foreign exchange markets. Nevertheless, On Monday, the price moves were relatively well-contained. Moreover, it was much smaller compared to the recent sessions.
Adam Cole is the currency strategist at RBC Capital Markets. He said that we have to say that risk is still very high.
He adds that the situation in Italy has improved, and the underlying news flow from China is a lot better. Nevertheless, that is not the case for the United Kingdom and certainly not the case for the United States.
Colle says that the market will provide broader evidence of a peak in infections. It will be before calm returned and otherwise risked more brutal selloffs periodically.
The dollar index raised to as much as 0.7% to 98.992. It put back at Friday’s trading levels.
Analysts are saying that the investors’ end-of-month portfolio is rebalancing. Nevertheless, they are still nervous about the virus. All these facts supported the dollar.
The euro weakened to 0.6% to $1.1069. Meanwhile, Sterling dropped as much as 1% to $1.2318.
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