The U.S. dollar was pushed higher in early European trading on Friday. This increase also occurred along with the Japanese yen. There are several reasons that could underlie it. One of them is the news about U.S. President Donald Trump's positive Covid-19 virus.
An example is to hit risk sentiment, resulting in demand for safe-haven currencies, and a drop in the price of some commodities such as oil. The Dollar Index, which tracks the greenback against six other major currencies, was up as much as 0.1% at 93.797.
Meanwhile, USD/JPY fell as much as 0.4% to 105.11. It is the lowest level this week. Elsewhere, EUR/USD fell as much as 0.1% to 1.1732. In addition, GBP/USD also fell 0.2% to 1.2870. Meanwhile, the risk-sensitive AUD/USD fell as much as 0.3% to 0.7160.
Shocking Tweet from President Trump
President Donald Trump said last Friday in his tweet that he and his wife Melania had been tested. They are positive for coronavirus and will undergo quarantine for at least 2 weeks. The test was conducted after the president's trusted adviser, declared covid19 positive earlier on Thursday.
Ilya Spivak, chief Asia Pacific strategist at DailyFX, in a Bloomberg report, said that she has seen a massive risk-off response with stocks down, futures down, the dollar rising, yields falling. So this is a very clean risk-off response and it makes sense.
Investors do not know what to do with the circumstances. It means they just throw away and take money when trading. The virus is making a wider impact across the US as seasonal factors begin to benefit it again. Corona is still spreading in the country.
As it is known that new cases of COVID raised in 27 of the 50 U.S. states in September; which is higher than the cases in August. It means that the virus is still out of control. What's more, now President Trump is being declared positive.
Infection Rate in the U.S. Still High
What is said here is that the increased risk of the virus is still quite real. This is what Bank of Singapore FX analyst Moh Siong Sim said in a Reuters report. U.S. infection rates aren't down anymore. It reminds people that the virus still exists.
What's more, the infection rate has actually gone up this month. Risk sentiment has been undermined by the idea of a new US fiscal stimulus package stalling in Washington. The House passed a Special Democratic fiscal stimulus package worth $2.2 trillion Thursday night.
However, many have mentioned that this bill is highly unlikely to pass a Senate dominated by representatives from Republicans. At the same time, the latest block of economic data is likely to show that the U.S. economic recovery could stagnate.
With this in mind, attention will also be focused on the official U.S. jobs report to gauge the strength of the labor market in the world's largest economy. Some sectors of employment are thought to be still declining. It is not a good one.
The Decline in Employment in the Private Sector
Evidence from high-frequency data, such as payroll tracking figures from Homebase shows a decline in private sector employment. Meanwhile, the purchasing managers' index shows only a small gain. This is what an analyst at ING wrote, in a research note made.
Elsewhere, gold reportedly jumped 1% above the key $1,900 level. This comes amid new hopes for U.S. stimulus that could help alleviate the economic suffering of the coronavirus. Technically if gold is able to hold above 1900 there is the potential for gold.
It is able to continue to rise until the range of 1930 – the 1940s. Meanwhile, the Investors focused on talks between U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin to reach an agreement on the long-awaited COVID-19 relief bill.
