The U.S dollar started the week lower after the U.S.-China tensions rose over the weekend and as optimism about the re-opening of economies.
During the weekend, the tension between the U.S and China rose especially after the White House trade advisor Peter Navarro said that Beijing sent "hundreds of thousands of Chinese on aircraft to Milan, New York and around the world” to spread the virus.
Moreover, Federal Reserve Chairman Jerome Powell said that the U.S economy could shrink by 30% and the unemployment rate will most likely reach around 25% and he also added that the economy recovery could take until the end of 2021.
Furthermore, the U.S dollar traded lower against most major currencies on Monday as optimism about the re-opening and easing of lockdowns of economies increased the liquidity and trading volume for most major currencies and are returning to pre COVID-19 levels for most currencies.
The U.S. Dollar Index, which measures the strength of the dollar against a basket of six major currencies, closed Monday’s trading session at 99.61.
In Europe, the shared currency jumped on Monday after further policy easing. Europe's two largest economies France and Germany have announced a $500 billion coronavirus aid program to support economic recovery in the European Union and also Italy agreed on a €55bn package of fiscal measures.
However, investors are expecting more stimulus from European Central Bank and they are waiting for inflation data in the Eurozone on Wednesday, Markit Manufacturing data on Thursday and Monetary policy Meeting Accounts on Friday. The EURUSD closed at 1.09142 on Monday.
Moreover, Sterling traded higher against the U.S dollar as UK’s government extended its job retention scheme. However, The British pound remains under pressure after the Bank of England announced that they did not exclude the idea of negative interest rates.
Besides investors are still worried about post Brexit deal and cautiously waiting for UK’s ILO unemployment Rate report on Tuesday, the inflation data on Wednesday, Markit Manufacturing data on Thursday and Retail Sales data on Friday. The GBPUSD ended the session at 1.21951.
In the Safe-havens area, the Swiss Franc traded slightly higher against the U.S. Dollar after the increase in the Sight deposits at the Swiss National Bank and ended the session at 0.97125 USDCHF. However, the Japanese Yen ended the session lower against the greenback after data showed that Japan’s economy has declined by 3.4% and it is expected to get worse. The U.S. Dollar closed at 107.330 USDJPY.
Gold prices fell on Monday’s session and closed at 1732.31 after closing at 1741.63 on Friday. The drop came as optimism about a potential COVID-19 vaccine has increased and investors are moving to riskier assets such as equities. However, with interest rates are expected to decline worldwide, gold prices might increase as gold tends to gain with low interest rates.
- In Canada, the Loonie closed Monday’s session in the green as the increasing crude oil prices helped the commodity-sensitive CAD outperform the American dollar. Nevertheless, the Loonie is under pressure as traders are waiting for inflation data on Wednesday. USDCAD closed the session at 1.39398.
- In Australia, the Aussie dollar gained against the Greenback on Monday profiting from weak U.S dollar. However, the Aussie remains under pressure after China told five major state-owned utilities not to buy Australian thermal coal. This came after China has already banned meat imports from four Aussie processors. The AUDUSD ended the session higher at 0.65225.
Cryptocurrencies were mixed Monday, Bitcoin closed the session at 9656.80 BTCUSD. Litecoin and Ethereum ended the session higher at 42.62LTCUSD and 210.41 ETHUSD, respectively.