Greenback soars ahead amid fresh fears over pandemic

Forextraders

The coronavirus pandemic was back at the forefront of traders’ minds on Friday after a range of countries around the world grappled with the risks of a potential second wave of the disease.

Statistics from the US in particular took strong hold in the world news headlines.

There has been a rise in cases of the infection in various states across the country this week, and there has also been a spike in the number of cases resulting in a hospital admission.

Over in China, a part-lockdown has re-emerged in the capital after fresh cases began to appear there – with the figure now believed to be three digits in size.

Concerns about world politics, especially in relation to China, continued to be present in traders’ minds.

China and India have spent the last few days dealing with issues on their border in the Himalayas – and while there has not been any very significant escalation in tensions there, it appeared to feed into a broader risk-off sense among traders.

The same went for the Korean peninsula following outrage after a liaison office in the demilitarised zone between North Korea and South Korea was blown up the North earlier in the week.

A South Korean government minister has since resigned as the crisis took hold.

The dollar appeared to be the primary beneficiary of this.

It was up to its best position in close to two weeks against its index, which is a basket of other worldwide currencies brought together to act as an effective monitoring tool against the dollar.

It was seen up by just under half a percentage point in this regard.

The world’s riskier currencies, such as the New Zealand dollar, suffered a little as fears appeared to bed in.

The New Zealand dollar was down to $0.6407 at one stage in its pair against the US dollar, which represented its worst performance since Monday of this week.

Trade was also on the agenda on Thursday and into Friday, with uncertainty in that regard appearing to fuel the dollar’s return to glory.

US President Donald Trump, who is seeking re-election in November in an increasingly uncertain political environment, said on Thursday that he was still considering ceasing the relationship with China.

This came after diplomats from both countries met in the US state of Hawaii in the Pacific Ocean a day before – though this meeting did not appear to yield any firm results.

Elsewhere around the world, sterling was close to its worst position in a fortnight in its pair against the US dollar.

It was spotted at $1.2403 in that pair after the country’s central bank met and made some announcements.

However, there seemed to be concern from some traders that the Bank of England could risk failing to purchase enough bonds as economic uncertainty from the coronavirus crisis continues.

The Japanese yen, which is typically described as a ‘safe haven’ currency due to its status as a global creditor, got slightly stronger against the greenback and reached 106.90.

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