The U.S dollar suffered significant losses at the first trading session of the week. Currency traders are having their hopes dashed as a result of the increasing COVID-19 caseloads going out of control specifically in emerged markets amid promising potential COVID-19 vaccines already in the pipeline.
- At the time of writing this report, the U.S. Dollar Index, which monitors the greenback’s strength against a basket of major currencies dropped 0.14% to trade at 92.263 points.
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What this means
Currency traders seem to be highly concerned about reports that millions of Americans are anticipated to flout warnings to stay indoors amid the upcoming Thanksgiving holiday, raising fears such significant movement of humans could trigger the number of COVID-19 cases that are already going out of control.
In addition, Western Europe does not look immune too, taking into consideration that Europe’s largest economy Germany, could see its current restrictions on human mobility extended until mid-December.
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What you should know
The U.S. Dollar Index tracks the greenback against a basket of major global currencies such as the Japanese yen, British pound Sterling, Swedish Krona, Euro, etc. Individuals hoping to meet foreign exchange payment obligations via dollar transactions to countries in Europe or Japan, would need to pay more dollars in fulfilling such payment obligations.
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What they are saying
In an explanatory note to Nairametrics, Stephen Innes, Chief Global Market Strategist at Axi, gave key insights into the macro that is playing out at the currency market.
“With just over a month to go until Christmas now, attention will remain on the Covid-19 pandemic as governments worldwide continue to impose tough restrictions on their citizens to contain the spread of the virus.
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“Economic data will likely get worse before it gets better. The impact of continued lockdowns will be felt for some time before vaccines become widely available.”
Bottom Line
The currency market is having a tug of war right now establishing whether it can look through nearer-term negative data and news.
