Risk Off: USDX Leaps 0.64% Amid Coronavirus Concern

Justin Freeman
  • There are fears that the coronavirus pandemic may be about to cause further economic problems
  • Stocks and shares decline in value across the world as the UK appears to prepare for lockdown
  • The dollar index rose and reached 93.555 – despite questions over the Fed’s inflation policy
  • Risk-on antipodean currencies suffer in the market and decline in value

The US dollar index saw dizzying heights of success on the price charts on Monday as the value of many major global stocks fell.

Stocks across the world dropped as traders began to make assumptions about a ‘second wave’ of the pandemic, which has already claimed almost a million lives and caused significant economic slowdowns.

In Europe, stock prices were seen at their worst position for a fortnight.  Similar problems were seen for American stock futures.  The index, which is used by traders to assess the performance of the greenback compared to many other currencies from around the world, was spotted up by more than 0.6%.  This left it at 93.555.

The rise for the currency came despite the fact that many market watchers have spent the last few weeks predicting that the currency was in for an extended gloomy period.  This prediction had been made by some following the announcement from the US Federal Reserve that strict inflation targets would be adhered to.  However, the resurgence of question marks over the domestic and global responses to the pandemic appeared to be enough to put that fear to bed.

The dollar also went up in a number of other pairs.  The British pound was one of the worst victims, with the currency going down by 0.9%.  The dollar was spotted at $1.28 in the markets in this pair at one stage.  The response to the pandemic in Britain, in particular, was one of the main drivers towards the risk-off mood.  Senior British government scientists warned on Monday that the country would be facing 50,000 cases of the virus every day by the time October arrives.  There are now fears of a further lockdown or some variety of restrictions on movement.  However, some of the worst victims of the dollar’s resurgence were the antipodean currencies.

The Australian dollar, which has long since been known for being a proxy for risk, was down by over a percentage point.  It was seen at $0.7204 against its US counterpart, which marked a significant fall.  The New Zealand dollar, though, went further, with a decline of 1.5% reported at one stage.  It was spotted at just over $0.66 on the price charts.  For some analysts, the day appeared to herald similar feelings to the announcement of the original significant coronavirus restrictions back in March.  Whether or not the economic and forex aspects of this wave of the pandemic will be as significant, though, remains to be seen.

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.

Justin Freeman
Between 74-89% of CFD traders lose Between 74-89 % of retail investor accounts lose money when trading CFDs
  • Low trading costs
  • Great market flow
  • Research and analysis which helps spot trades
  • Wide range of Copy and Social Trading options
  • Limited range of non-forex markets
Your capital is at risk Europe* CFDs ar...
  • Multi-asset broker offering a wide variety of markets
  • Strong regulatory framework
  • Innovative risk management tools
  • Choice of market-leading platforms
  • Wide spreads on some markets
  • Expiry date on Demo Accounts
eToro Logo77% of CFD traders lose 77 % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
  • Social and Copy Trading Platform
  • Beginner Friendly
  • Risk-free Demo Account
  • Top-tier regulation
  • Limited means of raising queries
  • Withdrawal process isn’t really ‘client-focused’
Blackbull LogoYour capital is at risk
  • User-friendly platform with great trade-analysis tools
  • Leverage Up To 1:500
  • Spreads as low as 0.00 pips
  • Quality trade execution thanks to high-spec IT infrastructure
  • $0 minimum account opening balance
  • 26,000 tradeable instruments
  • Not available in all jurisdictions
  • Regulatory infrastructure
XM LogoYour capital is at risk
  • Low minimum deposit
  • Super- tight bid-offer spreads
  • Impressive trading platforms
  • Tier-1 regulators
  • Difficult to contact tech support
  • No Crypto