From the shallow 2 cent levels of rate movement between the best and worst times to purchase US dollars from euros this month, it can be suggested that neither currency has better adapted to the virus-hit economies. With mid-market rates dropping to 1.08 then rising to a peak of almost 1.10, the rates have plateaued out at 1.08 for the last few days as despite many news reports indicating the severity of the financial and social damage caused by COVID-19, it is difficult to suggest who has fared worse.
In summary, the US jobless claims have surpassed the 22 million with the Federal Reserve estimating that this figure could breach 46 million. With these figures in mind US President Donald Trump is looking to ease the lockdown in early May as the number of new cases is in decline. This has come with significant criticism as the US receives several thousands of fatalities daily from the virus and with people heading back to work could cause a second wave of cases and deaths. Trump is set on reducing the economic contraction as much as possible however and wants to get its citizens back in to work provide they undertake strict social distancing measures.
The Eurozone is not seeing any rosier statistics either. Reports by McKinsey are predicting that unemployment could double to roughly 15% with a further 59 million jobs at risk. These figures have been predicted, in a worst-case scenario, to not recover to their prior levels until 2024 suggesting that even if the virus cure is fully developed and introduced, potentially through Gilead, by the end of the year then there is still a long way to go before life is back to a relative “normal”.
In economic data, tomorrow for the rest of this week appears to have the only releases with any expected volatility. The EU will see the Markit Manufacturing and Composite Purchasing Manager’s Index tomorrow with the US receiving just the US jobless claims. For investors looking to purchase euros or US dollars may want to keep a close eye on these releases as US jobless claims are anticipated to continue to 26 million claims in two weeks time suggesting further weakness for USD.
From a world-wide perspective the International Monetary Fund is predicting that $9tn dollars will be wiped off the global economy as a result of the Coronavirus. With this in mind, any nation that looks to be better off than others, such as Australia and New Zealand, could be an indication of currency strength to be following as unsurprisingly the main driver in exchange rates has been virus-based.
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