Dollar Struggles as Pandemic Fears Grow – 03 July 2020

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The US Dollar traded within a narrow trading band during Asian trade on Friday with traders wary of the growing numbers of cases of the USD StrugglesCoronavirus in the US. Concerns that the situation could worsen in the near term has essentially discouraged some FX traders from higher risk currencies. The Centers for Disease Control in Atlanta, GA reported a resurgence of Coronavirus infections, largely in those states which had lifted lockdown and quarantine restrictions. The intent, generally, was to jump start the local and regional economies which have been struggling over the past several months. A number of US governors have been forced to back pedal and revise their re-opening plans as medical centers and hospitals are stretched thin.

As of 10:25 am in Tokyo, the EUR/USD was trading at $1.1246, a gain of 0.0934% and off the session peak of $1.12494. The GBP/USD was also higher at $1.2471, up 0.0562%; the pair has ranged from a low of $1.24571 and a high of $1.24783. The USD/JPY was lower at 107.5130 Yen, down 0.02% and off the session trough of 107.431 Yen.

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Also weighing on sentiment are concerns that the friction between the Trump administration and Beijing could escalate. Yesterday, the US Senate approved legislation which would mete penalties on US banks that are conducting business with Beijing; analysts are fearful that that will worsen the rift between the two governments. The greenback did get a lift on Thursday from labor data with more new jobs reported in June than analysts had expected. Tempering that news, however, was the report that average hourly earnings were worse than analysts had forecast, while initial and continuing claims for jobless benefits was higher than anticipated.

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