The dollar hit a four-day high last week. It has seen its biggest weekly rise since early April. The historic collapse in oil prices partly caused such success, but the dollar’s safe-haven appeal receded as oil prices stabilized. It ended the rally on Friday. However, concerns about the Euro kept the currency afloat.
Meanwhile, several Asian currencies declined as well. The Kiwi traded below 60 cents at $0.5996, while the Aussie dropped to $0.6359. All in all, the Aussie and Kiwi each fell by about 0.2%.
Traders were waiting for preliminary data on orders for goods in the United States, as well as a German business sentiment survey. Both of them were due later on Friday. The analysts are concerned, as they think that any global recovery will probably be slow and patchy.
What about the Euro?
The Euro dropped by 0.4% against the U.S. dollar to a one-month low at $1.07275 on Friday. And the currency tumbled down to a three-year low against the Japanese yen at 115.55 yen.
The EU leaders’ meeting influences the Euro’s struggles. While the currency rebounded shortly on Friday and edged into positive territory, traders remain cautious.
The meeting took place on Thursday. While EU leaders agreed to fund recovery from the coronavirus pandemic, differences continued amongst EU governments.
Ilan Solot, a currency market strategist at Brown Brothers Harriman in London, stated that the authorities just delivered on the basics and fell short of surprising markets positively.
Old disputes resurfaced across the EU while Italy and Spain experienced a much harder hit from the pandemic than Germany. Investors are nervous due to this uncertainty. According to the French President Emmanuel Macron, the leaders argued whether the fund should be transferring grant money, or merely making loans to help businesses.
The outcome of the EU meeting reflected the disagreement about how to resolve the crisis in Europe, as well as prevent an escalation in peripheral bond yields – declared Ulrich Leuchtmann, head of FX strategy at Commerzbank.