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Weekly Roundup: US dollar stumbles on coronavirus vaccine hopes

currency-newsWeekly Roundup: US dollar stumbles on coronavirus vaccine hopes
The US dollar found itself on the back foot last week as an improvement in market sentiment trimmed demand for the safe-haven ‘Greenback’.

This upbeat mood was initially triggered by positive news regarding a possible coronavirus vaccine. US pharmaceutical giant Pfizer reported encouraging initial results from its first human trials.

The publication of the latest US non-farm payrolls bolstered market sentiment further.

The highly influential data release revealed US job growth exploded last month with a record 4.8 million jobs added as more states began to ease lockdown restrictions.

Despite the data potentially being out of date already given the recent flare ups in US coronavirus cases, the upbeat data bolstered market hopes that the global economy is recovering and bolstered investors’ sentiment to the detriment of the US dollar.

However, the disturbing large increase in US coronavirus cases is keeping fears of a second wave at the forefront of many investors' minds.

This ensured the pull-back in the safe-haven US dollar remained limited at the end of last week, despite the closure of US markets for the 4 July weekend creating thin trading conditions in the ‘Greenback’.

On the data front at the start of this week, the latest vastly improved ISM non-manufacturing PMI failed to lift US dollar exchange rates higher, despite June’s figures reaching pre-coronavirus levels.

Turning to this week, it's likely that coronavirus concerns will remain a key catalyst of movement in currency markets throughout the session.

This could see the US dollar recoup some of last week’s losses if concerns over a global coronavirus resurgence begin to take hold again.

A renewed focus is also likely to put on US initial jobless claims as the closure of a number of southern states in an effort to tackle massive new coronavirus outbreaks may have sent unemployment claims spiralling last week.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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