The turmoil in oil is rattling the forex market. There was a rebound in crude prices from an unprecedented collapse. Moreover, it only partially calmed markets unnerved by the massive drop in global demand led by Coronavirus. Thus, on Thursday, the dollar pushed ahead against the currencies of oil producers.
Coronavirus is threatening the global demand for energy. The euro is looking to policymakers for a fiscal response.
Against the United States dollar, the euro held steady. Moreover, the euro was ahead of the pound as well. This happened ahead of a meeting of European Union officials. There was a bloc’s response to the economic turmoil that was caused by the coronavirus pandemic.
Analysts are saying that sentiment is still supportive of the United States dollar. This is because of the coronavirus outbreak. It is driving a global depression, which will encourage investors to opt for the safe holding in their funds in the dollar.
Ray Attrill is head of the forex strategy in Sydney at National Australia Bank. He said that the dollar is a bit of a phoenix-type character. It seems it keeps coming back.
Moreover, he says that he is still of the view that the dollar rally is on borrowed time. Nevertheless, there are signs of stress. Furthermore, it is not clear that the United States dollar shortage has been addressed for everyone.
Against the Canadian dollar, the United States dollar edged up to C$1.4177, following a 0.3% decline on Wednesday.
Close to a two-week high, the United States dollar held steady at 24.4710 Mexican pesos.
The United States currency edged up to 10.7706 against the Norwegian crown. It was near a one-month high reached on Wednesday.
On Thursday, United States WTI (West Texas Intermediate) futures rose 4.41% to $14.36 a barrel early in Asian trading. On Monday, front-month West Texas Intermediate futures fell to around $40. The glut of oil and dwindling capacity to store it sent oil prices into a spin.
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