Fri, December 09, 2022

Dollar Down as COVID-19 Cases Continue to Rise Globally

U.S. economy, retail sales, US flag and US dollar with Covid-19 text..

The dollar was down on Monday morning in Asia’s forex exchange. The ever-increasing number of coronavirus cases are counterbalancing hopes for a vaccine that works. Once available, it can kickstart the economic recovery from the virus.

On Sunday in Asia, fifteen countries signed the Regional Comprehensive Economic Partnership (RCEP) trade deal. The agreement stimulates investors’ risk appetite over hopes for an improvement in trade affected by U.S.-China tension.

By 10:05 PM ET (2:05 AM GMT), the US Dollar Index edged down 0.14% to 92.588. The US Dollar Index tracks the greenback against a basket of other currencies. 

The previous week’s optimism boosted the greenback. However, it subdued and decreased risk appetite as the number of COVID-19 cases increased globally.

As of Nov. 16, records showed over 54 million cases worldwide and over 1.3 million deaths from COVID-19. This was according to Johns Hopkins University data. Data also showed there are over 11 million cases in the U.S. alone.

Over the weekend, U.S. President Donald Trump was active on Twitter. He briefly acknowledged losing the election to Joe Biden on Sunday in a morning Twitter post. 

Later in the day, he tweeted that he concedes “nothing” and vows to keep up a court fight. Albeit, it is deemed unlikely to succeed, said experts. 

Meanwhile, Biden prepares to take office in January. He will be on track to tackling the pandemic and is due to meet with pharmaceutical companies developing COVID-19 vaccines.

Currencies Movements

The USD/JPY pair dropped 0.07% to 104.55. That was the yen’s worst weekly performance since early June during the previous week.

The USD/CNY pair fell 0.27% to 6.5859. China’s industrial production increased by 6.9% year-on-year in October. It was above the forecast 6.5% growth but remained on par with September’s reading. 

Moreover, the Chinese unemployment rate fell to 5.3% from September’s 5.4%.

The antipodean currency AUD/USD pair climbed 0.37% to 0.7295. Investors are awaiting a speech by Reserve Bank of Australia (RBA) governor Philip Lowe later in the day. 

Furthermore, the minutes from the RBA’s November meeting are due to be released on Tuesday. Australia is also monitoring a growing number of COVID-19 cases in South Australia state.

The NZD/USD was up 0.60% to 0.6885.

The GBP/USD pair gained  0.27% to 1.3222. Investors continue to focus on the ongoing Brexit talks between the U.K. and the European Union.

U.K. chief Brexit negotiator David Frost has warned on Sunday that they might not succeed in getting an agreement. That is while the two sides made some progress towards a post-Brexit trade deal in negotiations.

However, the resignation of Dominic Cummings raised hopes for a deal. An adviser to the U.K. Prime Minister Boris Johnson, Cummings is an advocate of a “hard” Brexit. His resignation comes into effect in mid-December.

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