Forex News Roundup For June 1, 2020
USD Falls to 2-Month Low, Mexican Peso Gains Momentum
Currency Converter Calculator's Forex News Roundup aims to keep you abreast of the latest, most important developments in the global currency exchange market. Once again, the US Dollar (USD) is at the forefront of this edition, with the greenback continuing to dominate headlines due to US-Sino trade and political tensions, among other developments.
US Dollar Drops to 2-Month Low
The US Dollar has been fluctuating all over the place ever since the Covid-19 pandemic escalated earlier this year and the greenback is now trading at its lowest level since the novel coronavirus began hitting the US economy.
It initially surged by close to ten percent in the month of March, but it is currently trading at around 0.90 to the Euro (EUR) as the European Union (EU) negotiates a multi-billion Covid-19 recovery fund. The prospect of such a large fund aiding Europe's recovery has put downwards pricing pressure on the USD, as the US is far behind the EU in launching such a proposal and also appears to have a much longer road to reopening its economy.
A larger and more coherent US economic recovery fund could bolster the USD against the Euro, but it remains unclear what Washington's strategy will ultimately be and whether or not there is even an appetite for a similar program.
With over 1.8 million coronavirus cases and 105,000 related deaths, the US has by far been hit hardest by the pandemic, with Brazil trailing in second place with 500,000 cases and fewer than 30,000 deaths.
Mexican Peso Gaining Momentum Against USD
Falling volatility between the US Dollar and the Mexican Peso (MXN) is helping the latter build momentum after months of sharp depreciation, FX analysts have suggested.
Emerging Market (EM) currencies such as the Mexican Peso have had a torrid time since the pandemic escalated in Europe and the US in March, with investors dumping their holdings as they looked for safer assets or simply preferred to hold part of their portfolios as cash.
Mexico is reportedly hoping that the continued and escalating political and trade tensions between Washington and Beijing will weaken the USD. Tensions escalated further a few days ago after the US accused Beijing of trying to undermine Hong Kong's sovereignty, triggering a war of words between the two economic behemoths.
Furthermore, the nationwide civil unrest triggered by the death of George Floyd at the hands of a police officer in Minneapolis is another factor that could hurt the US Dollar, not only against the Mexican Peso, currency analysts pointed out.
A Quick Summary
- The US Dollar is continuing to dominate the headlines in the world of forex, with tensions with China and coronavirus-induced factors affecting the greenback in its battles against countless different currencies.
- The USD is currently trading at a 2-month low as the EU mulls plans to launch a bloc-wide economic recovery fund and as the United States continues to by far have the highest number of Covid-19 cases and deaths.
- Civil unrest across the US over the death of George Floyd while in police custody could also add selling pressure to the USD.
- EM currencies have taken a battering over the course of the pandemic, largely because investors have dumped their positions and flocked to safer assets, both in and outside of the forex market.
- However, the Mexican Peso is now building momentum and the Mexican government is reportedly hoping Washington's trade and political dispute with the Chinese government could give it a much-needed boost in its battle against the USD.