The International Monetary Fund’s last predictions in April forecasted world gross domestic product to fall by 3% in 2020. Spiking coronavirus cases in Germany, the United States, and elsewhere are being closely watched.
Tom Porcelli is RBC Capital Market’s Chief U.S. economist. He talked about the United States cases. Porcelli said that they expect that, over the next couple of weeks, state governors will be in a better position in deciding how to proceed. Moreover, he hopes that there will be more clarity about the situation.
Money markets tempered the hopes of a quick recovery for the world economy. So, on Wednesday, after two straight days of losses, the dollar got back some ground.
Risk sentiment soured in early trading in Europe. As a result, the United States dollar gained more than 0.2% against a basket of currencies.
The United States Dollar
Including the sterling, selling pressure hit several significant currencies. The pound was down by more than a third of a percent. The euro was falling around 0.2%, then gave up some of the gains from the week.
The central bank of New Zealand said that the balance of economic risk remains on the downside. The New Zealand dollar fell by almost 1%. So, it is ready to use additional monetary tools if necessary.
In the United States, coronavirus cases are rising.
Analysts say that any caution is because of the risk of a second wave of Covid-19 infections. Despite the improved economic data, this is quite true.
That data included the most robust rebound in the confidence of German businesses in Wednesday’s data.
Commerzbank analysts said that there is still a risk of a second wave. It could quickly push the forex market into the old pattern of risk aversion. The lockdowns imposed will probably be much less severe than the first time around.
This week, the dollar index increased by more than 0.9% with the improving economic picture.
This is the current news of the market.