The dollar surged forward on Tuesday against most major currencies due to its safe-haven status. There were several reasons for the U.S. currencies increase. Along with the coronavirus uncertainty, the news about the critical condition of North Korea’s dictator influenced currencies.
The Japanese yen also soared, so much so, that the dollar dropped against it by 0.2% at 107.40.
The euro, on the other hand, fell by 0.3% at $1.0833. European countries have been issuing debt to support their economies, which have collapsed due to the lockdowns. According to Marshall Gittler, the analyst at broker BDSwiss, the euro is suffering as markets contemplate the increased borrowing necessary to fund the recovery from COVID-19.
What caused the oil-linked currencies’ decline?
Oil-linked currencies tumbled down on Tuesday. The Norwegian crown fell by 0.7% at 10.51 against the dollar. While the Canadian dollar decreased by 0.4% to 1.4211 against the greenback, sliding to a two-week low. The Swedish crown also dropped by 0.5% at 10.07.
The currencies declined after the U.S. crude oil futures collapsed into negative territory for the first time on Monday. Factory closures and travel curbs caused supply glut and sagging demand for oil. Hence the recent plunge in oil prices.
U.S. West Texas Intermediate crude for May delivery was trading -$2.51 per barrel on Monday. Off a low of minus $40 hit in New York trading. The prices moved to positive territory early Tuesday, but this is drawing money from the risk assets to the safety of dollar-denominated assets.
The more actively traded June contract is down at $20.27 a barrel, while the May contract is due to expire Tuesday. Shane Oliver, the head of the investment strategy at AMP Capital Investors in Sydney, stated that while oil is off its lows, a lot of companies are going to get hit, and they could start to fail.