August 9, 2020

Euro touched its strongest since May 2018

LQDFX Forex news Blog | Euro touched its strongest since May 2018

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The euro touched $1.19, its strongest since May 2018 as the dollar extended its dramatic fall sending the common currency higher.

The euro enjoys its biggest monthly gain in a decade and analysts suggest it may hit $1.20 within the next few days.

The currency was little moved by data showing the euro zone economy recorded its deepest contraction on record in the Q2. Also, EU’s inflation unexpectedly ticked up in July.

The euro traded below $1.10 as recently as May. But after EU leaders agreed this month to a 750-billion-euro economic recovery fund many investors have warmed to the currency again.

New cases of coronavirus surged across several U.S. states and some recent data pointed to an economic recovery losing steam.

U.S. gross domestic product plunged 32.9% in the second quarter, the biggest decline on record. Jobless claims rose last week, another sign the economic recovery has slowed. Investors fretted that a rebound in the U.S. economy would be derailed by the struggle to stem the coronavirus epidemic.

Further, on Thursday the U.S. President Trump raised the possibility of delaying the November presidential election.

U.S. figures overshadowed positive manufacturing data from China and Japan. China’s official Purchasing Manager’s Index data showed that factory activity grew in July for a fifth straight month.

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Forex – Euro touched its strongest since May 2018

Investors looked past a severe economic contraction in Germany and on to company earnings. Abysmal economic data for the second quarter and rising global COVID-19 cases darkened the mood.

The dollar index was set for its worst month in a decade against a basket of currencies, dropping 0.1% to 92.699. Expectations the U.S. Federal Reserve will maintain its ultra-loose monetary policy for years also depressed the dollar. The greenback has fallen nearly 5% in July, with most of the drop coming in the last 10 days.

The greenback hit a 4-1/2 month low 0.40% against the yen to 104.30, having lost 3.3% this month.

The pound surged to $1.3143, a 4-1/2 month high. It was slightly stronger versus the euro at 90.33 pence.

The Swiss franc extended its rally against the dollar. The U.S. currency is at its weakest since early 2015 and last down another 0.1% at 0.9077 francs.

Gold also turned higher, with spot gold trading 0.83% higher at $1,975.58 per ounce, just short of record highs.

Oil prices rose on Friday and were on track for monthly gains, benefiting from a weaker dollar.

Brent crude was up 43 cents, or 1%, at $43.37 a barrel by 1130 GMT. On Thursday, Brent closed 1.9% down after touching its lowest since July 10.

U.S. crude gained 36 cents, or 0.9%, to $40.28 after dropping 3.3% in the previous session, also off lowsnot seen since July 10.

PLEASE NOTE The information above is not investment advice.

Sources: Reuters, Investing, CNN money