The dollar slipped as better-than-expected Chinese trade data painted a less gloomy picture of the coronavirus’ economic fallout than markets had feared.
The risk sentiment returned to market as China’s March exports fell 6.6% from a year earlier, compared with a forecast for a 14% drop. Imports fell by less than 1%, compared with a 9.5% drop predicted by economists. Equity markets rallied globally.
Experts are hopeful that the worst of the coronavirus outbreak is over in places like Germany. Very gradually, a handful of European countries start this week easing restrictions. Yet there is no clear consensus on how to move forward.
But the long-term consequences are just beginning.
France says its national economy may contract by 8% due to the pandemic. In the UK, one third of all national health staff tested were positive for Covid-19.
The United States, with the world’s third-largest population by country, has recorded greater loss of life from COVID-19 than any other nation. But, daily fatalities in the US also fell sharply and states began making plans to reopen their economies. President Donald Trump said that his administration was close to completing a plan to re-open the U.S. economy.
Last week, the U.S. Federal Reserve rolled out a $2.3 trillion effort to bolster local governments and small and mid-sized businesses. The Fed’s latest efforts have added to current dollar weakness, analysts say.
Australia’s jobless rate is forecast to spike to the highest level in a quarter of a century because of the coronavirus pandemic.
START TRADINGForex – Chinese trade data beats expectations
The Australian dollar led a rally in riskier currencies as Chinese trade data brightens mood. Traders left the safety net of the highly liquid dollar and turn to riskier currencies. Gold and the safe-havens of the Japanese yen and Swiss franc also rose.
The dollar index, which measures the greenback against a basket of six rival currencies, fell 0.4% in North American trade to 98.99.
Against the euro, the dollar weakened by 0.5% to $1.097.
The Japanese yen rose versus the greenback to a two-week high of 107.20 yen.
The Australian dollar rose to a more than one-month high of 0.643 per U.S. dollar but had retraced some of those gains to last trade at 0.641. Aussie is sensitive to Chinese demand because of the country’s dependence on raw materials exports.
Sterling rose to one-month highs versus the dollar and euro on Tuesday. Signs that lockdown measures may be slowing the spread of COVID-19 strengthened currencies seen as riskier bets.
The pound topped $1.26 in afternoon trading, its highest since March 13.
It hit a one-month high of 86.84 pence per euro, before paring back gains to be broadly flat.
Oil prices plunged again as investors remained unconvinced that record supply cuts would soon balance markets. U.S. crude fell 5.76% to $21.12 per barrel and Brent was at $30.65, down 3.43% on the day.
Gold prices rose to a fresh seven-year high.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money