The Japanese yen continued its slide on Monday as economies across the world saw the first signs of their lockdowns ending.
As countries as diverse as China and France began to ease their lockdowns, the currency markets responded by flocking to the dollar.
This development was also fuelled by the news that cases of the virus appeared to be ticking upwards in some locations – despite the fact that governments across the globe appeared to be moving away from lockdown measures.
In Germany, for example, it was revealed that the rate of new infections was speeding up on a basis described in the press as exponential.
In South Korea, meanwhile, figures showed that the infections were up to their highest position in a whole month.
The Japanese yen, which in different times was seen as a reliably safe-haven currency, was down.
It has seen at its worst performance in 15 days against the greenback and was down by just over four-fifths of a percentage point.
This followed the decision of a purchaser based in the US to snap up a significant volume of the dollar-yen currency pair.
In the US itself, the dollar index – which is a tool used by traders to assess how the currency is doing in relation to several others from across the globe – was up by around 0.37%.
It was seen at 100.16 at one stage over the course of the day.
One of the reasons why the US dollar tends to be bought up during times of turbulence is because it is easily and readily converted into cash – something that investors often want to be able to do if they are concerned about meeting their financial obligations.
In Europe, the single currency was down by around a fifth of a percentage point in its pair against the dollar – at one point, it was seen at $1.081.
There is a range of issues on the horizon for the forex markets – the main one, of course, being the coronavirus and its consequences.
Many countries are ending their lockdowns in phases rather than all at once, and it is likely that the effects of each new phase – both in economic and in health terms – will occupy the minds of traders.
There is also a speech on the way from the US Federal Reserve’s Chair Jerome Powell, and this is due on Wednesday.
Traders are likely to look for signs that an adjustment to monetary policy could be on the way for the US economy.
The ongoing risk of a trade dispute between the US and China is also likely to continue to fuel risk sentiment – or lack thereof.
It is not clear how this is likely to pan out. Last week, the two countries appeared to reactivate some of their long-standing issues in a war of words over trade and the origin of the pandemic.
However, it was revealed on Friday that a phone call between the two countries had dampened down tempers – at least for now.