Forex News Roundup For June 8th, 2020
Forex News Roundup: US Dollar Falls Against Asian Currencies, Investors Reduce Short Positions
Currency Converter Calculators Forex News Roundup aims to keep you abreast of all the latest developments and happenings in the foreign exchange market in a simple, condensed and digestible piece.
Over the past few days, theres been movement in many exchange rate battles between the US Dollar (USD) and several Asian currencies, and the Great British Pound (GBP) is potentially poised for significant moves as the UK government mulls relaxing social distancing measures sooner than expected.
Asian Currencies Make Gains Against USD
Several Asian currencies made gains against the US dollar on Sunday, with analysts attributing this to better than expected US employment figures which encouraged investors to reduce their holdings of so called safe-haven assets, such as the USD, as many are now more optimistic of a relatively swift global economic recovery.
The selling of US Dollars marginally hit the greenbacks price, and Asian currencies also directly benefitted, as some investors essentially converted their USD holdings into certain Asian currencies, such as the Thai Baht.
The South Korean Won and the Thai Baht both gained approximately 0.4 percent against the USD each, and the Taiwanese Dollar strengthened by 0.2 percent relative to the greenback.
Equities and other riskier assets, including emerging market (EM) currencies, are likely to continue to benefit as the global economic recovery gets underway and progresses.
Investors Adjust Short & Long Positions
Forex investors have slightly reduced their short positions against the US Dollar in recent days, while net long positions against the Euro (EUR) increased by $1 billion to reach $11.3 billion. This came as investors and traders rolled back their net EUR short positions to respond to the changing market conditions.
Meanwhile, overall bullish positions in the Japanese Yen (JPY) have fallen by close to $300 million in recent days. However, net long positions remain at a 10 year high, and its anyones guess how investor sentiment will shift (or not) from here.
Easing of UK Lockdown Could Help GBP
With the UK far past the peak of the Covid-19 pandemic and its daily infection and death rate continuing to fall, the British government is reportedly considering further easing its lockdown and associated social distancing measures earlier than previously expected.
The Pound could benefit considerably if the government were to indeed loosen social distancing measures sooner than expected, as it could help kickstart the economy especially the battered services sector and get millions of Brits back into paid work in a matter of weeks.
However, Forex analysts have stressed that any gains the GBP would make are dependent on how well other economies handle their own economic recoveries and financial stimulus packages.
A Quick Summary
- Numerous Asian and other EM currencies made gains against the US dollar as better than expected US employment figures were released, which encouraged investors to reduce their holdings of safe-haven assets and purchase riskier assets.
- For example, the South Korean Won and the Thai Baht both appreciated by roughly 0.4 percent against the USD each, and equities are also set to make gains if investors continue to look for riskier assets offering higher returns.
- Investors have marginally reduced their net short positions against the US Dollar, while overall long positions against the Euro increased by $1 billion to $11.3 billion.
- Finally, the UK governments plans to reportedly ease its nationwide lockdown sooner than expected could bolster the GBP against other major currency pairs, as it will help revive the British economy, though this will ultimately be dependent on how quickly other economies recover, FX analysts have emphasized.