US Dollar Struggles but Euro and Sterling Remains Strong
The US dollar continues to trade around two years low amid concerns over economic recovery and stimulus package. The USD index trades around a 93 mark against a basket of currencies, slightly above from two years low that it had hit in July.
On the positive side, the US president has suspended the plan of imposing new tariffs and restrictions on the Chinese e-commerce giant. China and the United States delayed a review regarding the Phase 1 trade deal. The market analyst has applauded the postponement of review amid the upcoming US presidential elections.
“That’s good news in the sense that it’s something we can place on the back burner for now,” said National Australia Bank senior foreign exchange strategist Rodrigo Catril. “But there are other uncertainties coming up that need to be resolved,” he added.
On the other hand, the euro and sterling look strong against the US dollar, with the euro is trading around $1.1844 and British Pound at $1.3095.
Euro lost upside momentum against the USD over the past few days amid trader’s concerns over the largest second-quarter Eurozone contraction.
The gross domestic product of the Eurozone fell 12.1% during the second quarter. This represents the largest quarterly decline in history. Eurozone’s GDP contracted by 3.6% during the first quarter. Spain was among the hardest-hit countries as its GDP dropped almost 18.5% during the second quarter.
Euro jumped sharply at the end of the last month due to the 750 billion euro stimulus deal between 27 member countries. The union is looking to support the countries that are struggling due to the impact of lockdowns.
“The fallout from the virus now poses a major challenge not just to the healthcare systems and the economies of the EU member states — it’s also a threat to the bloc’s integrity,” INFINOX said.