fbpx

Dollar firmly in front as recession fears persist

Chris Lee

Dollar firmly in front as recession fears persist

The US dollar continued to cement its position at the top of the global foreign exchange trading tree on Friday.

By Friday morning, it appeared that the currency’s rise over the course of the week was likely to be in the region of 2%, which marked its best performance since March.

This came after the biggest ever day on day rise in crude oil prices occurred.

This had a particularly profound effect on the US, which is the biggest gas and oil exporter on earth.

By Friday morning, the currency was spotted at $1.0838 in its pair against the single European currency, which reflected an overall rise of around 2.7% across the whole week.

In the dollar index, which is a mechanism used to monitor the performance of the greenback compared to many others from around the world, the currency was up by 1.8% over the course of the week.

It was spotted at 100.210 at one stage.

Elsewhere around the world, the greenback strengthened its position against a range of other currencies too.

Against the British pound, for example, the greenback was spotted at $1.2376 at one point.

Against the Kiwi dollar in New Zealand, the currency was at $0.5903.

A similar pattern was observed elsewhere in the Asia-Pacific region, with the Australian dollar seen at $0.6054.

However, there are still some potential pitfalls for the dollar on the way over the course of the day.

It is expected, for example, that payrolls data will be published in the US at 12:30pm GMT.

This is expected to show a big spike in joblessness levels due to the coronavirus, which has led to a series of lockdowns across the country.

Last week alone, the level of joblessness claims was up to around 6.6m.

This week, however, the level of employment is expected by some experts to go down by 200,000 – although a different poll suggested that the drop could be closer to 100,000.

Analysts pointed out, however, that this could benefit the dollar to some extent.

While there was acknowledgement of the fact that the US labour market was suffering several problems, there was also acceptance of the fact that the currency is “counter-cyclical”.

This means that even if an economic problem within the US causes issues for the global economy, this often means that demand for the dollar surges.

The worldwide coronavirus pandemic continues to ravage both economies and nations across the globe.

On Thursday, it was revealed that there are now over one million cases around the world.

However, the true figure is believed by some to be higher – especially given that not all countries are rolling out a comprehensive testing process.

The wider effect on the global economy has been severe, with some believing that there has been a contraction of almost one fifth in the world’s economy in just the first few months of 2020 alone.

Predictions now suggest that there will be a 4% contraction across the year as a whole.

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.

Chris Lee
Forex.com logo72% of clients lose money. Capital at risk.

- Trusted Global Market Leader
- Online FX & CFD Trading
- 180+  Global Markets, 84 FX pairs, 65 shares, 17 popular indices and more
- Forex, Indices, Commodities, Equities & Bitcoin
- Available to US traders

eToro LogoYour capital is at risk

- Trade 15 cryptocurrencies
- Beginner friendly