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Dollar Continues Slide Over Dimming U.S. Economic Recovery Prospects

·2-min read

By Gina Lee – The dollar was down on Friday morning in Asia, with the U.S. struggling to curb its surging number of COVID-19 cases. Combined with the looming expiry of some stimulus measures at the end of July as well as a record number of unemployment claims, investors are casting doubt over the U.S.’ recovery prospects.

“The USD bear case continues to sharpen with a break of the 94.65 March lows likely ushering in the next leg down,” Westpac analyst Richard Franulovich told Reuters.

The number of U.S. cases topped 4 million, with over 15.4 million cases globally as of July 24, according to Johns Hopkins University data.

The U.S. reported its first uptick in initial jobless claims since March, with 1.416 million Americans filing for unemployment claims over the last week. The number was higher than analyst forecasts for 1.3 million claims, as well as the previous week’s 1.307 million claims.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies slipped 0.07% to 94.585 by 10:18 AM ET (3:18 AM GMT).

Franulovich also noted the dollar faces a major hurdle in the coming week, with the U.S. Federal Reserve expected to take a dovish outlook at its policy meeting.

Meanwhile, the dollar’s loss was the Euro’s gain, with the European Union reaching agreement on a EUR750 billion ($868.987 billion) COVID-19 rescue package earlier in the week. The agreement boosted the Euro to a 21-month peak against the dollar.

The USD/JPY pair was down 0.28% to 106.56. Markets in Japan are closed for a holiday.

The AUD/USD pair gained 0.25% to 0.7115 and the NZD/USD pair was up 0.11% to 0.6641.

The USD/CNY pair was up 0.05% to 7.0066. U.S-China tensions continue to simmer, with China vowing retaliation for the U.S. order for its Houston consulate to close by Friday. But a flight carrying an unspecified number of U.S. diplomats to Shanghai departed on Wednesday evening.

The GBP/USD pair gained 0.11% to 1.2753.

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