Forex markets trapped on pandemic concerns and economic recovery
Vrasidas Neofytou
Head of Investment Research
Forex Update, Tuesday, 14th of July, 2020
The Forex market has been trapped between the reopening rollbacks in the US and hopes for an economic recovery in other parts of the world.
The safe-haven currencies such as the US dollar, Japanese Yen and Swiss Franc have regained their safety status since the start of the week with the return of risk aversion sentiment. Florida reported daily records in infection cases while California re-imposed lockdown measures to contain the spread of the virus. However, these safety currencies remain near monthly lows against riskier currencies, as the US dollar ended its third week of losses in a row since last Friday.
The Euro climbed near 1.14 against the US dollar, its 4-month high, gaining support from the dollar’s weakness, the improved macroeconomic activity in the Eurozone and the ongoing fiscal and monetary packages from the European Union.
The Pound Sterling trades in range as the gains from the stimulus plans were capped from the disappointed UK Gross Domestic Product figures and weaker fundamental data.
Moving to Commodity currencies, the Australian and New Zealand dollars trade near yearly highs, benefiting from the rising prices in precious metals, copper, iron ore and other industrial metals. Furthermore, both currencies received support from the weakness in the US dollar and the massive rally in the Chinese stock markets.
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