25/06 – USD claims safe haven status as virus cases rise

GBP: Risk on moves sees pound lower
EUR: Merkel and the EU back in the spotlight
USD: Safe haven status back after Covid cases rise

GBP

The pound struggled throughout yesterday’s trading session after falling against both the USD and EUR. The move came after the US is likely to impose tariffs on $3.1bn of exports from the UK, Germany, Spain and France. An article was also released by the FT claiming analysts at the Bank of America said that risk and uncertainty around Brexit has caused the pound to trade as an emerging market currency and would be better suited against currencies like the Mexican peso rather than the USD. 

EUR

With Merkel being back in the spot light and after years of German resistance, both her and Scholz has agreed to back the €500bn joint European debt issuance to aid member states worst hit by Coronavirus. This couples with the continuing fears of the stability of the Eurozone after Merkel stated she is worried about two things: that a second wave of infections could force authorities to implement another lockdown, and that Europe could break apart because of the crisis. Despite this, the euro remains strong. 

USD

US stocks fell last night as the US published a record number of daily cases around Florida, Oklahoma and South Carolina causing some US states to lockdown and quarantine themselves for 14 days. Expect the dollar to continue its ongoing safe haven strength throughout todays session as fears from GDP figures and jobless claims are released at 12:30.

Elsewhere

Asian stocks posted their biggest drop in eight sessions, bonds rose and the USD was firm on Thursday as surging US Coronavirus cases and an International Monetary Fund downgrade to economic projections knocked confidence in a recovery. Whilst we’re on the topic of the rise in Covid-19 cases, Australia also posted its biggest daily rise in infections in two months.

Have a great day and please do take care.

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Jeremy Thomson-Cook

Jeremy Thomson-Cook

Jeremy has over 13 years experience working in the FX industry. As a specialist in political risk mitigation and currency hedging, he regularly advises clients on the day-to-day moves of the markets and the implications of fiscal and monetary policy on international businesses.