The US currency has demonstrated stability and strength once again despite any difficulties, even such large-scale as the pandemic COVID-19. Experts still record an overwhelming demand for dollars, the demand for which is growing every day.
Despite the US Federal Reserve's unprecedented volume of money injections to stimulate the economy, the US currency did not show signs of weakening. Analysts are sure that the demand for the dollar as a protective asset is still very high, and this trend will continue. According to experts, increased volatility will continue in the markets until the picture about the long-term consequences of the pandemic and its impact on economic activity is clear. As a result, the demand for safe haven assets, primarily the dollar, will remain unlimited.
By trading on the dollar as a protective instrument, investors continue to move away from risk. According to analysts, this is now the mainstream. Experts say that the rise of the USD is due to the growth of anti-risk sentiment prevailing in the market. The current situation provides strong support for the US currency, but at the same time suppresses the growth of other currencies.
According to experts, the recent rise provoked an increase in short positions in the US currency from a number of investors. On Monday, April 20, the dollar added about 0.1% against the euro and the pound and 0.2% against the Japanese currency. In relation to the basket of major currencies, the dollar rose 0.2% to $ 99.90, rushing to the level of 103, a three-year high recorded in March 2020. The growth of the US currency did not allow the European currency to rise, however, the balance in the EUR/USD pair is still maintained. On the morning of Tuesday, April 21, the pair was trading at 1.0842 - 1.0844. Later, it entered a downward spiral, moving around the levels of 1.0838 - 1.0839.
However, despite the general positivity of the dollar, there is still a problem in the current situation. First of all, this is the precariousness of the labor market, capable of undermining the restoration opportunities of the American economy. It can be recalled that the number of American citizens who filed initial applications for unemployment benefits last week amounted to 5.245 million. According to analysts, this is an overwhelming level that has changed dramatically under the influence of the pandemic. Since the middle of last month, over 22 million people have applied for unemployment benefits in the United States. Experts anxiously await the latest data on the US labor market. Recall that on Thursday, April 23, there will be a current report on applications for unemployment benefits in the country. Previously, their growth ranged from 3.3 to 6.6 million. At present, an additional 4.5 million applications are expected. As a result, the total number of unemployed may exceed 26 million over the past 5 weeks. According to analysts, these processes may negatively affect purchases of US currency, thereby stopping the rise in the price of USD.
On the other hand, the Conference Board index, published last Friday, did not add positivity to the US economy. This month, it plummeted sharply by 6.7%, to 104.2 points, which is the most powerful decline in history. According to experts, such a collapse of the index is associated with a reduction in business activity amid the COVID-19 pandemic.
Experts consider information on orders for durable goods as another indicator that reflects the current state of affairs in the American economy. This information is expected next week, and it, as in the case of the labor market, can bring a lot of disappointments. Analysts expect strong failures in this market segment. Products in this category are very expensive, and the reduction in their purchases means a sharp decline in the welfare of Americans. Moreover, experts are sure that such a decline in purchasing power will lead to extremely negative consequences for the US economy.
In the current situation, many experts predict an increase in demand for safe haven assets, primarily the dollar. Analysts are confident that the dollar will become insurance for investors in the near future during the recovery of both the global and the American economies. This will be very relevant, since even with a positive scenario, that is, in the event of a quick end to the pandemic, the US economy will not be able to quickly change. Experts concluded that economic shocks can not be avoided until the end of 2020, and the best assistant for capital in this period remains the dollar.
