empty
 
 
08.04.2020 10:53 AM
Dollar is still unbeatable even amid the situation with COVID-19

This image is no longer relevant

On Tuesday, Wall Street grew for the second day in a row, due to the signs that coronavirus infection is now decreasing in the US. Investors are hoping that the quarantine measures are now in effect.

Meanwhile, the White House began planning to open the economy in the next 4-8 weeks. According to Larry Kudlow, chief economic adviser to the US president, New York may have already reached the peak of the infection. The governor of New York, Andrew Cuomo also said that the state's methods of social distance seem to have taken effect. "The president would like to resume the economy as soon as he can," Kudlow said.

However, state and municipal authorities in other parts of the country are not pleased with the news. They warned that the peak was not yet reached.

Key US stock indexes rose at the opening of trading. Dow Jones Industrial Average (DJIA) climbed by almost 4%, but then slowed down. On Tuesday, the US stock market closed with a weak correction. This morning, the main indicators are declining, which means that the sentiment has worsened once again.

DJIA

This image is no longer relevant

One day, or even one week, is not a trend, especially since the world is dealing with an insidious and unpredictable virus. Nonetheless, the markets still hope for the recovery of the economy, despite the current statistics beating the lowest records in history.

The small business optimism index in the United States fell by 7.8% in March, which is the largest decline in history (since 1986).

Small businesses are struggling to survive the pandemic, and it's hard to say how severe the consequences will be. But, only one thing is clear: business needs urgent support.

According to Bloomberg, in addition to losses, small businesses are faced with other problems, such as difficulty in applying for loans under the Fed's program.

The markets are waiting for the next batch of data on the US labor market, which will come out on Thursday, April 9. A massive increase in the number of unemployed is expected.

COVID-19 has infected more than 1.3 million, and killed more than 74 thousand people worldwide. Although the number of infected continues to increase in many densely populated countries, the initial improvements are encouraging. The markets, stubborn and ahead of the curve, want to believe in the best. As the Wall Street Journal noted, it is "difficult to challenge the view that the situation is beginning to improve."

"We have a good decrease in volatility in the foreign exchange and stock markets. We know that central banks have done a very good job of easing tensions in the dollar funding market, and that helps," Societe Generale commented. "It takes some time for everything to settle down," bank strategists added, not specifying how much time it would take - a week, a month, a year or two.

USDX

This image is no longer relevant

Despite the growing optimism, the dollar index actively declined yesterday, experiencing the strongest drop in two weeks and falling below 100 points. Regardless, the dollar still remained expensive. This is not to say that the demand for dollar has ended, or at least stopped. The currency is still a "safe haven" in the midst of a general downfall in stocks and shortage in liquidity.

Now, the dollar resumed its growth, as traders plunged into reality and once again began to go into defensive assets. Today, the markets will concentrate on the Fed's minutes of the meeting, which may include additional comments on the scale of the potential economic downturn due to the coronavirus pandemic.

Natalya Andreeva,
Analytical expert of InstaForex
© 2007-2024
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST
  • Chancy Deposit
    Deposit your account with $3,000 and get $8000 more!
    In March we raffle $8000 within the Chancy Deposit campaign!
    Get a chance to win by depositing $3,000 to a trading account. Having fulfilled this condition, you become a campaign participant.
    JOIN CONTEST
  • Trade Wise, Win Device
    Top up your account with at least $500, sign up for the contest, and get a chance to win mobile devices.
    JOIN CONTEST
  • 100% Bonus
    Your unique opportunity to get a 100% bonus on your deposit
    GET BONUS
  • 55% Bonus
    Apply for a 55% bonus on your every deposit
    GET BONUS
  • 30% Bonus
    Receive a 30% bonus every time you top up your account
    GET BONUS

Recommended Stories

Can't speak right now?
Ask your question in the chat.
Widget callback