As virus cases grow again, risk appetite wanes. The dollar’s gains are slowing the rally of the yuan. The lockdown in Melbourne (Australian city) is weighing on the city.
Investors weighed hopes for a swift economic recovery against fears concerning a resurgence in the pandemic, particularly in the United States. Thus, on Wednesday, the dollar dipped slightly.
As oil prices eased over oversupply fears, demand for the United States currency as a safe haven ticked down. Additionally, stocks dithered in Asia. Thus, European bourses opened in negative territory.
Federal Reserve Officials expressed concern. It surrounded the idea that the rising coronavirus cases could harm economic growth just as stimulus measures start to expire. Thus, risk sentiment would also be undermined.
The euro strengthened by a modest 0.12% to $1.2870. Meanwhile, against the dollar, a recent fall in selling positions provided room for possible further drops.
Commerzbank foreign exchange analysts told clients in a note that what could look lethargic at first glance is most likely be based on uncertainty as to what will happen to the economy.
The United States Dollar
They said that there are intense fears that the continued spread of the virus may quickly stifle that recovery again. In turn, it will strengthen the United States dollar. This is because of its (admittedly questionable) status as a safe haven.
The dollar bought at 0.9414 Swiss francs, a 0.13% dip.
The sterling increased by 0.14% to change hands at $1.2560. Nevertheless, against the euro, it was stable at 0.8988. Thus, talks resumed between the European Union and Britain on the terms of their future trade relations.
Traders are waiting for an announcement on Wednesday by British finance minister Rishi Sunak. He must talk with concern to his next moves to prevent a wave of job cuts from damaging an already weakened economy. Thus, overall, the pound held on a nearly three-week high.
Against the euro, the Norwegian kore was stable at 10.6940, after data showed the economy rebounded in May.
