Dollar Gains Against Major Rivals
The U.S. dollar was firm against most major currencies on Wednesday as surging coronavirus cases dented risk sentiment and took a toll of assets such as equities and riskier currencies.
The movements of the currencies were also impacted by the International Monetary Fund’s report that forecast a sharper than earlier projected contraction of the global economy this year.
White House health advisor Dr. Anthony Fauci warned on Tuesday that parts of the U.S. are beginning to see a “disturbing surge” of Covid-19 cases. Fauci told Congress that the next two weeks would be critical in trying to keep the virus under control.
The International Monetary Fund today forecast a deeper recession for this year and a slower and uncertain recovery for next year after the coronavirus, or Covid-19, pandemic plunged the global economy into a crisis like no other.
The IMF predicts that the global economy will shrink 4.9% this year, significantly worse than the 3% drop it had estimated in its previous report in April. It would be the worst annual contraction since immediately after the Second World War.
For the United States, the IMF predicts that gross domestic product will fall as much as 8% this year, even more than its April estimate of a 5.9% drop. That would be the most severe recession since the Great Depression of the 1930s.
The IMF has forecast that Germany, France and the U.K. will see their outputs fall by 7.8%, 12.5% and 10.2%, respectively, this year.
The dollar index edged up gradually after opening marginally up in the Asian session. The index was last seen at 97.22, up 0.6% from previous close.
Against the Euro, the dollar was stronger by about 0.5% at $1.1252, rising from Tuesday’s close of $1.1309.
Against Pound Sterling, the dollar firmed up to $1.2419 from $1.2521, gaining more than 0.8% in the process.
The Japanese Yen weakened to 107.07, more than 0.5% down from Tuesday’s close of 106.53 yen a dollar.
The dollar strengthened to 0.6869 against the Aussie, after exhibiting weakness earlier in the day as it eased to 0.6962.
Against the Loonie, the dollar fetched C$1.3636, well off Tuesday’s close of $1.3550, while the Swiss franc was notably weaker at 0.9479 a dollar.