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Coronavirus Case Numbers Spiral as Forex Market Pressure Remains

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Coronavirus Case Numbers Spiral as Forex Market Pressure Remains
  • Dollar Remains Low as Cases Rise
  • Cautious Tone From Powell and ECB
  • GBP Traders Await BoE Speech and Brexit News

Pressure remains on the US Dollar forex market Friday as it continued to the US Dollar Index continued to move lower for the second consecutive day. This move has been prompted by record COVID-19 case numbers in recent days and 150,000 new cases added in a single day. Fed Chairman Jerome Powell also cut a cautious figure addressing the ECB forum on Thursday. This caution has been felt in currency pairs around the world including the Euro and Pound which waits on its own developments later today.

Dollar Weakens Under Heavy Case Load

Those forex trading the US Dollar will start Friday by finding more weakness following the news that the US has seen a record rise in case numbers within the last 24-hours. With little data of great significance to be released today, many expect this to be the key driver to end the week. This left the Dollar Index to continue trading below the 93.00 mark for a second consecutive day as traders look at other safe havens including the Japanese Yen and a move back into gold for some.

Even though vaccine news was greeted with great positivity in the markets this week the reality of the situation on the ground is this will do little to reduce cases in the immediate future. Even though trading has remained cautious with the Dollar, this has not been reflected in a big change in EUR/USD or GBP/USD markets since both are also under similar pressures.

Fed Chief Cautious and Hinting Stimulus

Caution came not only from traders yesterday but also from the chief of the Federal Reserve Jerome Powell. He was addressing an ECB forum yesterday and struck a cautious tone that was noted by forex brokers and will not have helped USD trade.

Powell noted that even though a vaccine was on the way, more still needed to be done to support the economy and workforce in the short term as case numbers continue to multiply. He also backed up previous comments that no matter what, there will be a need for more stimulus in the US economy. In the same forum, ECB President Lagarde called for optimism but also more fiscal stimulus to bridge the gap for the Eurozone economy.

GBP Steady as Brexit Talks Continue

The remarks of Bank of England Governor Andrew Bailey will be closely followed later today by Sterling traders for any hint of similar caution as shown by his US and EU counterparts. For the meantime though, trading in the Pound remains steady and improving above $1.31.

Brexit trade talks are also ongoing in London with another deadline looming and wide scale implications for Pound trading based on the outcome with President-Elect Joe Biden’s support of the Good Friday Agreement in Northern Ireland and general opposition to any change in that agreement perhaps adding an extra dimension to talks.

 

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Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

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