The dollar may have gained some ground against both the euro and pound yesterday, but remains at one of its lowest rates for the past year and a half.
The immediate cause is the surge in Covid cases in the US. Ten US states saw their worst tally of news cases so far. That includes Florida – especially in the central area around Orlando and up and down the coasts – as well as California, Texas, Oregon and the Carolinas.
It may seem counter-intuitive that a pandemic could support the currency, but the dollar is a currency people buy in a crisis. Rising tensions surrounding China – its latest deadly skirmish with India being seen by some as an attempt to deter India from closer ties with the US – are another cause for global concern and, again, support for the dollar.
Finishing the week we have US Federal Reserve Jerome Powell’s speech, but the general feeling is that there will be no move towards negative interest rates this year.
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