The dollar was down on Friday morning in Asia’s forex market. It continues a downward trend despite investors turning to safe-haven assets.
The plunge was due to the surging number of global COVID-19 cases. Additionally, the U.S. Congress’ stall on passing further stimulus measures ahead of the Nov. 3 presidential election.
The U.S. Dollar Index fell 0.03% to 93.832 by 10:30 PM ET (2:30 AM GMT). This is so far its largest weekly rise since late September as it gained 0.8% the past week.
Europe and the U.K. implemented new restrictions to curb the spread of the virus. The number of cases in the U.S. also increased, with Midwestern states battling a rise of new cases as temperatures drop.
On both sides of the Atlantic, the spike in cases triggered fears of fresh lockdowns. It prompted worries over the impact on economic recovery.
Analysts said markets fear a slowdown in activity as new virus cases rise. The deterioration is evident everywhere across Europe. It is a major blow to the recovery’s momentum and reinforces deflationary risks.
The above were statements from ANZ bank analysts including Susan Kilsby and David Croy.
Americans claiming unemployment over the past week reached 898,000. It was higher than the 825,000 claims forecast and hitting a two-month high. The data suggested bumpiness in the road to recovery.
The data consistently supports the idea that the spread of COVID-19 causes stalling of economic recovery. Same thing can be said about the removal of fiscal stimulus. These were observed by NAB FX strategist Rodrigo Catril.
The stalemate over the stimulus measures continues. Senate Majority Leader Mitch McConnell rejected President Donald Trump’s offer to raise the price tag on this $1.8 trillion offer.
The USD/JPY pair fell 0.17% to 105.27 with the yen recording a 0.2% rise for the week.
The Antipodean risk sensitive currencies were mixed. The AUD is seeing losses, but the NZD is reporting gains against the dollar.
The AUD/USD pair edged down 0.17% to 0.7080, losing 2% for the week. Forex investors are still digesting dovish comments from the Reserve Bank of Australia.
Across the Tasman Sea, the NZD/USD pair gained 0.05% to 0.6596. This is with Jacinda Arden widely expected to win the general election taking place on Oct. 17.