Pandemic worries impact the forex markets further

Chris Lee
Pandemic worries impact the forex markets further

The greenback managed to push ahead in the foreign exchange markets this week after the coronavirus pandemic reappeared in a number of key locations around the world.

According to industry watchers and press outlets, the main concern is not the public health impact of the pandemic’s return but the fact that the much-vaunted economic recovery that the world economy was recently on the cusp of could now be at risk.

One analyst even suggested that the US economy could face a so-called ‘double-dip’ recession (meaning that one recession would be succeeded by a short upsurge and then a second recession) in the event that restrictions are put back into place.

Despite the fact that the US dollar was a strong performer in the markets, the US was one of the main areas of concern when it came to coronavirus prevention.

Some parts of the country appeared to return to mid-pandemic levels of lockdown over the weekend, with highly populated states such as Texas and California carrying out moves such as the shutdown of drinking spots.

The dollar’s performance is not always connected to domestic events, and in several cases the currency has been seen to rise in the global markets despite chaos at home.

One of the reasons for this is that the dollar is a highly liquid currency, which means that it can be converted from holdings into cash quite easily.

The dollar index, a tool designed to allow traders to monitor the performance of the greenback in relation to several other global currencies, was fairly firm.

It was seen at 97.466, which was close to its best performance in a month or so.

In terms of the Japanese yen, meanwhile, there was further evidence that the global markets are shifting away from risk.

The currency there was seen at 108.18 to the US dollar at one stage.

The world’s risky currencies were out of favour as trading for the week got underway.

The Australian dollar was not rising, though in fairness it was also was also holding relatively firm.

It was seen at $0.6872 against the greenback.

The New Zealand dollar, meanwhile, was spotted at $0.6420 in its US dollar pair at one stage.

The British pound was down over the course of early trading, and was seen at $1.2341 in its greenback pair.

Despite the dominance of the coronavirus pandemic in the global news headlines, the UK and the EU have still not agreed a trade deal.

The two sides supposedly have until the end of 2020 to strike the agreement in the aftermath of the Brexit separation process.

However, the coronavirus pandemic continues to have a profound effect on the world, and it remains at the forefront of most government minds.

It is not just the US that is experiencing resurgences in cases.

Portugal, China, Germany and others have all had to grapple with fresh, localised lockdowns in recent days due to spikes in case numbers in certain areas.

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