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Dollar to Break Losing Candle on Growing Virus Slowdown

The U.S. dollar bounced Wednesday amid rising concerns that the damage to the global economic system from the coronavirus pandemic shall be long and protracted, boosting the safe-haven appeal of the greenback.

Dollar to Break Losing Candle on Growing Virus Slowdown

A fall in oil prices on expectations that manufacturing cuts by OPEC may not be sufficient to support crude during a worldwide demand crunch also weakened riskier currencies, with the oil-exposed Norwegian crown and Canadian greenback down sharply.

The U.S. dollar had weakened in the earlier four consecutive sessions on cautious optimism that lockdowns have been slowing the spread of the virus.

However, analysts warn that it is still unclear whether economies will recover shortly or whether it’d take longer than expected.

Fresh financial data from the U.S. later on Wednesday is expected to indicate a sharp decline in retail sales, as well as hits to manufacturing and industrial production. This would be the first set of economic information outside U.S. unemployment claims.

The global economy is predicted to shrink by 3% throughout 2020, a collapse in the activity that will mark its steepest fall since the Great Depression of the 1930s, the International Monetary Fund stated Tuesday.

In European trading hours, the greenback recovered from earlier lows hit in Asian trading and rose 0.8% to only shy of 99.6 =USD against a basket of rivals, on track to interrupt a four-day losing candle.

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U.K. Sterling Advances Against US Dollar and Euro Tuesday

Sterling rose against the greenback and the euro Tuesday, as Britain’s fractious trade discussions with the EU and expectations of rate reductions to counter coronavirus damage held the currency near recent 4-1/2-month lows.

U.K. Sterling Advances Against US Dollar and Euro Tuesday

British PM Boris Johnson has raised EU hackles by saying Britain will not be sure by EU guidelines or the jurisdiction of its prime court.

The first round of negotiations with the EU’s administrative unit, the European Commission, is due to last until Thursday, with half a trillion euros’ worth of yearly trade at stake.

Sterling, which has come under heavy selling stress in recent days, regained some ground.

The currency stood at 86.94 pence per euro, up almost 0.3% on that day, having skid over 1% Monday.

In opposition to the greenback, sterling was up 0.3% at $1.2791, holding above a recent 4-1/2 month low of nearly $1.2726.

The trade negotiations have been overshadowed by deepening concerns over the spread of coronavirus and uncertainty over the extent of the economic damage it could trigger.

Market expectations have grown for central banks to cut rates of interest to curb the fallout, including possibly through coordinated action. Policymakers from developed nations, along with Britain, are to hold a conference call to debate the next steps reports suggested no immediate stimulus would be offered.

Current Bank of England (BoE) Governor Mark Carney told legislators Tuesday he expected a “highly effective and timely” global response to the economic blow from coronavirus.

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Sterling Bounces Towards Six-week High Against Greenback

Sterling headed towards six-week highs against the greenback on Tuesday as investors continued to cut their short positions, even as the U.K. PM Boris Johnson stuck to his promise to take the U.K. out of the European Union by 31 October.

Experts said traders were proceeding to reverse their guesses against the currency as they cautioned about being caught on the wrong side should the pound further extend a rally it began last week.

A broader weaker greenback also supported the pound in shifting higher Tuesday.

Boris Johnson is required by a law passed this month to ask the EU for a three-month stay on Brexit if a divorce agreement is not approved by Oct. 19; however, British media reported that his team has ways to circumvent it. Johnson stated Monday Brexit would happen on Oct. 31, with or without a deal.

Britain’s supreme court has begun to hear the federal government’s argument that Johnson’s choice to suspend parliament until the Brexit date was not unlawful as Scottish judges ruled last week.

His opponent parties say the suspension was aimed at impeding parliament from stopping a no-deal Brexit, an accusation Johnson refuses.

The currency has firmed over 3% in August, its gains accelerating after parliament passed the law ruling out no-deal Brexit. It hikes 1.3% last Friday, grasping at a headline — later denied — that Johnson’s Northern Ireland allies might soften their Brexit stance.

Pound Monday hit a six-week high of $1.2515. The currency was struck by the volatile greenback, which surged late on Monday as oil prices eased and trade strains with Japan appeared to cool.

Traders are now bracing up for the U.S. Federal Reserve’s policy meeting this week.

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Greenback Declines Against Yen, Offshore Yuan Slides On Trade Misery

The greenback dropped in opposition to the yen, and the yuan tanked, in indication traders remain cautious that China’s currency policy has turned into a brand new flashpoint in its trade conflict with the US.

The yuan eased in opposition to the greenback in offshore trade on Wednesday after the People’s Bank of China set its absolute midpoint not much harder than its earlier close.

China’s currency further opened weaker versus the greenback in coastal trade.

The world’s two prominent economies are in a bitter trade spat that rapidly intensified late last week when U.S. President Donald Trump said he would impose more tariffs on Chinese imports.

China replied on Monday by permitting its currency to weaken beyond the psychologically important line of 7 per greenback, which instantly prompted Washington to label Beijing, a currency controller.

Market viewpoint has worsened rapidly in consequence, which would help the safe-haven yen and hasten yuan slumps as there seems to be no quick decision to the U.S.-Sino war.

Risk sentiment took a further hit after the Reserve Bank of New Zealand shocked investors by paring rates of interest higher than expected, highlighting the rising concern policymakers have about the global economic system.

The greenback dropped 0.3% to 106.13 yen in Asian trading. On Tuesday, the dollar rallied from a low of 105.51 yen to as high as 107.07 yen in a risky session triggered by worries about China’s currency policy.

Revived issues about trade conflicts are likely to push demand for the safe-haven yen higher.

The offshore yuan declined to 7.0701 per greenback, not far from 7.1397, the weakest since international trading in the currency started in 2010.