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Dollar eases pressure off global currencies, Gold, and Oil

Dollar moderates, easing pressure off global currencies, Gold, and Oil

The Dollar is taking a breather after soaring for the past eight sessions, as the Dollar index (DXY) tests the 103 support level while still remaining near its highest levels since Q1 2017. This is offering some slight reprieve for the rest of the world, with all G10 and Asian currencies, except for the Indonesian Rupiah, seeing gains against the US Dollar.

The Fed has established Dollar liquidity-swap lines with 14 central banks around the world, ensuring that more US Dollars can be supplied to meet the overwhelming demand from companies and financial institutions amid a liquidity crunch. Such a move may only result in a temporary dampener on the DXY’s rise, as global demand for the Greenback is expected to remain elevated amid raging uncertainties and fears surrounding the coronavirus outbreak.

Dollar index (DXY) test 103 support

Gold, Oil take a breather from recent drop

The easing Dollar is allowing the likes of Gold and Oil to take a beak from their recent slump. Bullion prices have wiped out their year-to-date gains this week, now lower by more than two percent since 2020 began. Meanwhile, Brent Oil is being allowed to breach the $30/bbl line for air, but is still set to wrap up four consecutive weeks of declines.

While Gold’s luster is expected to eventually shine through once the Dollar-liquidity crunch eases, Oil prices are in need of a fundamental intervention. Until OPEC can overcome their differences and slash their output levels, the world risks being flooded with cheap supplies at a time when global demand is being severely curtailed by the collapsing demand levels due to increasing travel limitations and quarantine measures that are pulling the brakes on economic activity worldwide.

Gold takes a breather from recent drop

 

Oil takes a breather from recent drop

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


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