The index of US dollar (DXY) was stable around the level of 92.40 in the early European session yesterday. Before, that currency was slipped down by the testimony from Jerome Powell.
The EUR / USD was traded around its closing level yesterday around 1.1830. Meanwhile, the GBP/USD, AUD/USD, and some other high risk currencies are back to be corrected.
The market concern about the COVID-19 escalation is one of the factors which supporth the strong dollar exchange rate at the moment. Yesterday, Jerome Powell gave a new discussion.
That is about the policy direction in the future. He maintain his opinion that the Inflation increase in the United States right now is only temporary. He also stated the other things.
The USD Declined After that Statement
Furthermore, Powell think that the proper economy to start reducing the obligation purchase is still far from the reality. That is why; it will be a mistake to change the policy too early.
The US dollar declined ahead that Powell’s testimony. However, some analysts see it as a chance to buy. Terence Wu and Frances Cheung from the OCBC bank gave their opinion.
No one really expect anything beside the dovish statement from Powell. He doesn’t give the new information in his comments, but gives the reasons to take the profit from the USD.
They see the decline as a part of a volatility and an effort to grow higher than the greenback. In line with that prediction, the USD is starting to increase in today trade again.
The AUD / USD Pair is Also Declining
The AUD/USD is weakening as well although the jobless rate is slipping down from 5.1% to become 4.9%. That is better than the market expectation so far. The US Dollar is now better.
It is because that currency is seen as the safe haven amidst the pandemic. Some big cities in Asia and Australia are now facing the tighter lockdown in line with the government effort.
It is especially to handle the COVID-19 spread. The growth momentum, business trust, and the investors sentiment can be worse if the lockdown is extended. That is said by an analyst.
Market is still in an uncertain path. The real huge experiment is the opening of social restriction in England if that can be successful. That will become a huge impact for the recovery.
Waiting for the British Experiment
An expert assessed that if the experiment in England was succesful, that means that some other countries from Japan up to the Europe are able to chase the US economy rebound.
That can push the dollar to be weakening as well. The British government continues the plan to take most of the social restriction in 19 of July. However, that not erase the total national restriction.
Boris Johnson as the Prime Minister warned that the pandemic has not ended yet. He states about the importance of a careful approach. Next, the market participants will wait for a second statement from Powell.
That will be shared in the second day in front of the America’s congress this night. Besides that, they will still check for the global economy recovery development prospect nowadays.
An Announcement from Boris Johnson About the lockdown
Boris Johnson as the prime minister confirmed yesterday that he will delete almost all of the social restrictions due to the COVID-19 in 19 of July 2021. That plan is almost 100%.
It is although the amount of the COVID-19 cases in his country is still high. However, that decision fails to erase the market concerns. That is in line with his message that the pandemic has not over yet.
Pound Sterling was underpressured around 1.3845 to the US dollar in a an early European Session trade on Thursday. Meanwhile, the EUR/GBP increases by 0.2 percent to the level of 0.8555.
