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LONDON. — The dollar rebounded yesterday amid growing concerns that the damage to the global economy from the coronavirus pandemic will be long and protracted, boosting the safe-haven appeal of the greenback.
A fall in oil prices on expectations that production cuts by OPEC may not be enough to support crude during a global demand crunch also weakened riskier currencies, with the oil-exposed Norwegian crown and Canadian dollar down sharply. The US dollar had weakened in the previous four consecutive sessions on cautious optimism that lockdowns were slowing the spread of the virus.
But analysts warn that it remains unclear whether economies will recover quickly or whether it might take longer than expected.
Fresh economic data from the US later yesterday is expected to show a steep fall in retail sales, as well as hits to manufacturing and industrial production. This will be the first sets of economic data outside the US jobless claims.
“Investors are taking stock and bracing for some big US numbers. These are the numbers you want to see to get a sense of how bad things are going to be,” said Kenneth Broux, FX strategist at Societe Generale. Oil prices going down is also not good for sentiment.
“It’s broken the expectation that OPEC’s action would stabilise prices.”
In morning trading yesterday, the dollar bounced off early lows hit in Asian trading and rose 0,5 percent at 99,40 =USD against a basket of rivals, potentially breaking the four-day losing streak.
The greenback gained across the board, particularly against currencies seen as riskier bets such as sterling, where it was almost 1 percent higher. — Reuters.
Online Reporter