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US dollar wins this forex trading week

David Hobart

The US dollar headed into Friday looking set to have achieved its best weekly performance since the year 2008.

The greenback, which is widely perceived to have “mopped up” in the wake of the pandemic’s fast spread, is understood to have performed so well because it is widely considered to be a liquid currency and hence easy to be bought and sold.

Overall, the dollar index – which is an artificial tool used by traders to monitor how the greenback is performing – is up by 3.7% over the course of the week.

This is in part because many people have sold their assets over the course of the week and are now looking to hold their investments in cash – with the dollar being the currency of choice.

According to analysts, investments were not in demand – as cash has been needed to meet obligations such as invoice payments and staff costs.

This did not mean, however, that there was no demand for other currencies, and those which are typically seen as safe havens were also in demand.

The Japanese yen, which has long since been perceived as the major global safe haven due to the country’s status as being a global creditor, was up against the greenback.

It was up by over half a percentage point, in fact. It reached 110.05 per dollar at one stage.

For the Australian dollar, which has taken a real beating in recent weeks due to its trading relationship with China and also due to its exposure to the global commodities market, managed to build itself back up a little over the course of the day.

It was up by 1.7% in its pair against the US dollar, for example, reaching $0.5839 at one stage.

However, the overall prediction for the currency is not great.

Some analysts are predicting that the Australian dollar could drop to $0.53 in its greenback pair, and that its neighbour – the New Zealand dollar – could go to $0.45.

The government in Britain has not yet imposed a lockdown to the same extent as some other countries.

Traders at brokers like OCTA FX, which offers the pound/dollar pair, found that sterling was also up slightly.

It was spotted up 1.3% from its position of $1.1636.

Despite the fact that there was some good news on Friday, general news about the coronavirus was not positive.

According to Reuters, representatives of the government in the Iranian capital city of Tehran said that the coronavirus – also known as Covid 19 – was causing the death of a person once every ten minutes.

On the lockdown front, California became the latest major jurisdiction to announce that it would keep residents at home.

This came after the US saw more than 13,000 cases of the virus.

It now means that California’s 40m people will see their movements significantly reduced.

The state is home to a number of major sector-specific investment hubs, including Silicon Valley and Hollywood.

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David Hobart
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