Dollar Slides Amid Economic Reopening Discussions

By Administrator_India

Capital Sands

The U.S. dollar sold off aggressively in early trade Monday, with traders turning away from the safe haven as more and more countries announce a gradual lifting of their Covid-19 restrictions.

At 3 AM ET (0700 GMT), the U.S. Dollar Index, which tracks the greenback against a basket of six other currencies, stood at 99.970, down 0.5%. GBP/USD rose 0.5% to 1.2434, while EUR/USD gained 0.2% to 1.0846. The Australian, New Zealand and Canadian dollars also all made headway, as did the ruble and the rand.

Over the weekend, global virus numbers continued to paint a broadly encouraging picture, with new infection numbers, deaths and hospitalization figures all moving lower, and high-profile victims such as Italy and Spain mapping out a path to reopening their economies.  

Helping the positive tone was the addition of more stimulus from the Bank of Japan earlier Monday, which opened up the possibility of unlimited Japanese government bond buying, while raising its ceilings on corporate bonds and commercial paper to 20 trillion yen. 

At 3 AM ET, USD/JPY traded 0.3% lower at 107.18.

Looking at Europe, the country hardest hit, Italy, has offered up more details on its plans to ease the nationwide lockdown from May 4. In the region’s economic powerhouse, Germany, the world’s largest carmaker by sales, Volkswagen , on Monday restarted work at its Wolfsburg headquarters.

In the U.K., Prime Minister Boris Johnson returns to work after his bout with the virus, and is expected to discuss plans for modifying – but not lifting – the lockdown, possibly before the May 7 deadline when the government is legally obliged to announce its next review of the rules.

Investors had flocked to the dollar in recent weeks amid continuing economic turbulence due to the Covid-19 pandemic, leading to safe-haven inflows and a dollar shortage.

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