Since COVID-19 has hit the U.S. economy, the U.S. market faced an unexpected shortage of the currency that might squeeze at any time. In such a gloomy economic situation, the U.S. investors got something to smile about after a better payroll report was released on August 7, 2020. As a result of which, the U.S. Treasury recorded higher yields in a $112 billion debt sale in the reported week. Despite the positive outlook, the U.S. dollar stayed low consecutively for the seventh week.
Taking note of the current economic trend, the analysts at JPMorgan said that due to uncertainty in the near-term economic performance of the U.S., especially against Europe and the weaker U.S. dollar resulting from increased COVID-19 cases in the U.S., the company kept its portfolio positioned in the EUR-bloc for several weeks now.
It was the virus impact that the euro ended at $1.773 on August 10, 2020, after it reached a two-year high of $1.1915 last week. There was also a decline in turnover due to uncertainty over the announcement of a new economic stimulus package for the virus-hit economy by U.S. policymakers.
It was, however, clarified by House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin on August 9, 2020, that they were hoping to resume COVID-19 fiscal aid talks after President Donald Trump issued executive orders on unemployment benefits. Amid all this, the U.S. dollar went above a two-year trough to 93.434.
Talking about the performance of the dollar against other currencies, it stood at 105.89 against Japanese yen—slightly above the recent low of 104.17, but a bit below 106.46.
With sanctions imposed by Washington on senior Hong Kong and Chinese officials and trade talks scheduled for August 15, 2020, investors are afraid of growing tensions over trade relations between the U.S. and China.
It is believed that trade talks will determine how the dollar would perform. It might go either way with benefitting the dollar and Swiss franc against yen and commodity currencies like the Australian dollar.
Moreover, consumer prices and retail sales are expected to boost consumer spending before relaxation in social restrictions to revive the economy take place.
If things go as planned, a considerable improvement and recovery are expected both in the Chinese figures as well as the EU production data this week.