Talks between the Netherlands and Italy, Dollar, and Others

As risk-aversion returns, the dollar recovers. As European Union ministers fail to agree to further support, the euro falls. Until Thursday, talks are put on hold. After the rating outlook cut, the Australian dollar recovers.

There is optimism that the coronavirus crisis has waned. It has increased concerns of investors over the economic impact of the pandemic. Thus, on Wednesday, the dollar firmed.

The euro was the main loser at the United States dollar’s expense. It was the day after the dollar suffered its worst decline against a basket of currencies in nearly two weeks.

The deaths from the coronavirus peaked around the globe after two weeks of gains. Thus, as global stocks turned negative, the dollar’s rise came.

Amid renewed concern about the spread of the virus, European equities fell. The continent’s response is mirroring Asian, late Tuesday, and a fall on Wall Street.

There was a failure on the agreement between the European Union finance ministers to agree about further support for their economies, hit by a coronavirus.

Dollar and Others

Thus, the euro fell by 0.2% to $1.0875. Impasse sent shorter-dated Italian yields spiking higher and spooked bonds market.

The talks, which try to agree on a package of measures for individuals, companies, and governments, were suspended until Thursday. Moreover, the source said that a feud between the Netherlands and Italy over what conditions must be attached to eurozone credit for governments was blocking progress.

ING wrote that they do not expect much progress to be achieved. Moreover, a move towards debt mutualization seems unlikely at this point.

Nevertheless, the pause will most probably have a limited impact on the euro against the United States dollar. That is what that bank says. It is because of partially given low market expectations.

Businesses and investors fear the worst and have rushed to the world’s reserve currency. Thus, the dollar has, for a month, a very closely tracked risk appetite.