Forex - Dollar Maintains Strength as Virus Cases Grow

Forex - Dollar Maintains Strength as Virus Cases Grow  | Jun 26, 2020 08:03

Forex - Dollar Maintains Strength as Virus Cases Grow

By Peter Nurse - The dollar has maintained its strong tone in early European trade Friday, with traders seeking out the safe haven as the number of coronavirus cases in the U.S. continue to grow. 

At 3:10 AM ET (0710 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was up 0.1% at 97.420. 

EUR/USD fell 0.1% to 1.1211, GBP/USD dropped 0.1% to 1.2408, while USD/JPY was down 0.1% at 107.13. 

“With data likely to play second fiddle to the virus headlines, investors are likely to remain rather jittery today, with the balance of risks for pro-cyclical assets tilted to the downside and the dollar may remain supported on safe-haven bids,” said analysts at ING, in a research note.

Economic data pointed to an economic recovery in the U.S. Thursday, with another small drop in jobless claims and a substantial rise in durable goods orders. Friday offers up spending data as well as Michigan sentiment numbers.

However, this has tended to be overshadowed by news of a record number of new coronavirus cases throughout the U.S., with state health departments reporting a total of over 37,000 new cases on Thursday.

“There is a growing concern that new restrictive measures will be deployed. In turn, while we maintain a positive medium-term view on risk assets, it will mostly be about infection numbers that drives sentiment in the short-term,” ING added.

That said, the second virus wave no longer appears to be a U.S.-only story. The development in EM/developing countries continues to be problematic for their recoveries and not least tourism. 

“It is hard to see things get much better until we get to a vaccine, which so far is still on track to arrive within 6-9 months,” said analysts at Danske Bank, in a research note.

Remaining in the emerging market sphere, the first round of the presidential election is set to be held in Poland on Sunday. 

Incumbent president Andrezej Duda from the government party is favorite to win, but if he doesn’t get a majority there will be a second round in two weeks’ time, likely against the main opposition candidate Rafal Trzaskowski from the pro-market reform party civic platform. 

“Should Trzaskowski surprise and win this could be positive for sentiment toward Polish assets including PLN,” said Danske Bank.

USD/PLN traded 0.1% higher at 3.9712 and EUR/PLN 0.1% higher at 4.4520.


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