Dollar Surges As Risk Aversion Bolsters Coronavirus Resurgence

Dollar Surges As Risk Aversion Bolsters Coronavirus Resurgence

The dollar maintained positive momentum throughout the first half of the day, continuing to rise to new weekly highs against most of its major peers, although demand for the dollar eased during US trading hours. Consistently high weekly jobless claims in the US put pressure on the dollar. The movement was limited amid a weak macroeconomic calendar.

Risk aversion continues to dominate markets amid fears of a new wave of coronavirus infections as the northern hemisphere enters into force in fall and winter. US equities closed markedly lower after a short initial rebound.

On the last day of his speech, the head of the US Federal Reserve System Powell said that there is “a risk of a worsening situation in the economy if support for households in one form or another is not continued,” once again calling on lawmakers to provide financial support.

Asian markets are heavily selling, with the major indices in deep red. In foreign exchange markets, commodity currencies continue to decline as the weakest. The dollar and the yen are the strongest, but for now, the dollar has the advantage.
BoJ Minutes Suggests Apprehension Over Coronavirus Resurgence
The minutes of the Bank of Japan meeting on July 14/15 showed that politicians are concerned about the resurgence of the coronavirus in Japan. Several board members commented that “the number of infections around the world is growing at a faster rate, so we must be on the lookout for the possibility of another uprising, including in Japan.” Another member warned: “If the number of infections rises again, the time for economic recovery will be delayed.”

Overall, members agreed that “the economy, with the resumption of economic activity, is likely to gradually improve from the second half of this year; however, the pace of improvement was expected to be moderate, while the impact of COVID-19 will remain globally.

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Azeez Mustapha is an experienced author, trader, markets analyst, signals strategist, and funds-manager.