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Hopes for coronavirus treatment weaken US dollar

Philip McHugh April 20th 2020 - 2 minute read

  • Pound edges higher on speculation the currency is undervalued
  • Cracks in EU unity weaken EUR exchange rates
  • Rising risk appetite undermines USD

 
 
Pound creeps higher ahead of heavy-data week
 
The pound crept higher at the end of last week on suggestions that the UK currency remains undervalued following its sell-off last month.

GBP investors will be kept busy this week with a slew of high impact releases, which should provide some more insight into how the coronavirus crisis is impacting the UK economy.
 
Important UK releases include unemployment and wage growth figures, the nation’s consumer price index, manufacturing/services PMI and retail sales numbers.
 
 
ZEW surveys in the spotlight
 
The euro struggled to find direction on Friday, with EUR investors increasingly wary that the coronavirus crisis is taking its toll on EU unity.
 
Observers raised concerns that EU countries have so far failed to agree on a coordinated lockdown exit strategy, raising questions about the future of the EU.
 
The focus at the start of this week will be on the latest ZEW surveys, with the euro potentially suffering as analysts predict a sharp drop in Eurozone economic sentiment in April.
 
US dollar’s gains capped by hopes for coronavirus treatment
 
After soaring on Thursday, the US dollar came to an abrupt halt at the end of last week on reports that drug trials for a possible coronavirus treatment were progressing well.

US Pharmaceutical company Gilead Sciences claimed that trials of its new antiviral medication had resulted in nearly all test patients with respiratory symptoms discharged within a week.

Market sentiment surged on hopes the new drug could help countries begin rolling back their lockdown measures, leading to a decline in demand for the safe-haven ‘greenback’.

This week investors will be keeping a close eye on Donald Trump as the US President pushes for states to begin reopening.
 
Upcoming Data:
 
Monday, 20th April 2020
10:00 EUR Eurozone Trade Balance
13:30 USD Chicago Fed National Activity Index
 

Written by
Philip McHugh

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