Dollar hovers in markets amid turn against risk

Chris Lee
Dollar hovers in markets amid turn against risk

The US dollar managed to rise a little and then hold firm in the markets on Wednesday after traders around the globe began to lose hope of an end to the economic impacts of the coronavirus pandemic.

The dollar’s index – a method of assessing currency performance used by traders who want to evaluate the currency’s performance compared to the euro, yen and more – managed to surge by 0.3% at one stage over the day.

After that, it stayed in a fairly flat range.

It is worth noting, however, that the dollar index as a whole has gone down by about a full single percentage point over the course of the week.

Elsewhere across the world, the New Zealand dollar continued a fall from grace.

Riskier currencies were in demand just a few days ago as traders appeared to come to the conclusion that the worst of the pandemic’s economic effects were over.

However, in recent days, this has all changed, and the New Zealand dollar was particularly vulnerable following an intervention from country’s central bank in which it claimed to be ready to activate certain monetary policies if necessary.

It was down by nearly an entire percentage point overall.

The question of whether or not the world economy is now beyond the worst of the risks is still broadly unanswered.

Economic data released on Wednesday appeared to show that there had been a rise in business confidence in Germany.

However, the movement away from risk appeared to indicate that the markets were not yet fully settled on the idea that the economy would be returning to normal.

It is felt by several market analysts that the main risk could come from a potential second wave of the pandemic, which has already claimed the lives of more than 470,000 people across the world.

While it is assumed by most market watchers that a potential future lockdown would not be as strong or strict as the one that most of the world is only just coming out of, its economic effects could continue to be severe.

There are several important events to keep an eye out for in the forex markets as the week continues.

Jobless claims information will be out of the US on Thursday, with the figures expected to arrive at around 12:30pm GMT.

Speeches from several central bankers are also due to occur on Thursday.

Isabel Schnabel, who sits on the European Central Bank’s executive board, is due to speak at 12:30pm GMT.

Robert Kaplan, who is the president and chief executive officer of the Federal Reserve Bank of Dallas in the US, will speak an hour later at 1:30pm GMT.

In Britain, there will be a speech from Andrew Haldane, who is the Bank of England’s chief economist and executive director for monetary analysis and statistics.

This is due to occur at 5pm GMT.

The day will be rounded off by a consumer price index release from Japan.

This is due to come out at 11:30pm GMT, and will cover the month of June.

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