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Forex News Roundup For June 15th, 2020

Forex News Roundup: US Dollar Rises, EM Currencies Plummet As Investors Flock To Safety

The US Dollar (USD) is at the forefront of all of our stories in this edition, with investors continuing to adjust their portfolio allocations to the Greenback in response to the changing economic climate, with Covid-19, in particular, continuing to play an important role. 


Investors Flock To US Dollar Following Increased Volatility

The S&P 500 dropped around 200 points from the start of the week to the lowest point on Friday, before partially recovering to 3,040 points as trading closed for the week. Other US equity markets also saw some turbulence, demonstrating that the stock markets remain vulnerable to the ongoing Covid-19 pandemic and the related economic concerns arising from the lockdowns and travel concerns.

Demand for the US Dollar surged as equity markets slipped this week, causing the Greenback to appreciate against many major and minor currencies. For example, the US Dollar ended the week roughly one percent up against the Euro, and rose around two percent against the Japanese Yen (JPY), from 107.4 on Monday to 109.6 on the weekend, before dropping off.

Analysts said they expect this correlation between the USD and global equity markets to continue throughout the pandemic and beyond, as investors tend to move to safer assets, such as the USD, in times of economic and financial turmoil. 


Emerging Market Currencies Suffer 

Emerging Market (EM) currencies plummeted in March as the coronavirus pandemic escalated in Europe and the US for the same reason outlined above (investors reducing their holdings of riskier assets and shifting capital to safe havens, such as the Greenback.) 

Many EM currencies posted marginal gains earlier this month, but they’ve since been wiped out for most due to the recent stock market turmoil. Thursday was a particularly bad day for EM currencies, including the Mexican Peso (MXN), which fell by around five percent.

Again, FX analysts have strongly suggested this trend will continue, so we can expect to see more volatility between the US Dollar and EM currencies in response to rising or falling stock prices. Falling oil prices have also hurt EM currencies whose domestic economies and government revenues are reliant on oil exports (Mexico, for example.)


A Quick Summary

  • The US Dollar is once again dominating the headlines in the Forex press, as investors continue to adjust their portfolios and switch out EM currencies for the Greenback. 
  • The S&P 500 fell by approximately 200 points from the start of the week to the lowest point on Friday. It then partially recovered to 3,040 points as trading halted for the weekend.
  • Other stock markets also witnessed some turbulence as they remain susceptible to shedding points in response to growing economic concerns stemming from the coronavirus pandemic. 
  • The sell-off of EM currencies this week was initiated by falling stock indices in the US, which prompted investors and traders to move to safer assets, such as the USD and gold. 
  • EM currencies have suffered ever since the Covid-19 pandemic escalated in Europe and the US earlier this year, as investors became more risk averse. 
  • As a side product, the US Dollar posted sizeable gains this week against many major and minor currencies due to the increase in demand for the Greenback.
  • FX analysts have said they expect these strong trends between falling equity markets and rising USD rates, and falling equity markets and falling EM currency prices to continue. 

The Currency Converter Calculator Forex News Roundup aims to keep retail currency traders and FX enthusiasts up to date with the latest happenings in the global currency market.