Rally for the dollar in uncertain landscape

The US dollar was once again surging on Monday as the reality of the next few months of the coronavirus pandemic set in for traders across the globe.

The currency was up in a range of pairs after a number of governments around the world either instituted or extended their lockdown policies and stimulus packages.

The dollar index, which is a tool used by traders to monitor how other currencies are performing in relation to the dollar, was up by almost an entire percentage point at one stage on Monday.

It was seen at 99.17 at this point.

Elsewhere around the world, the single European currency plunged by over 1% in its pair against the greenback.

The euro reached $1.1026 at one point.

The pound was down by a large amount too, although it managed to cap its losses at 0.8% in its dollar pair.

It reached $1.2384 at one stage.

There was some positive news for global investment, however.

Analysts emphasised the fact that developments in Italy and China, which have both been severely affected by the coronavirus, were looking more positive.

This is despite the fact that the US, which is now rapidly becoming another hotspot for the disease, is nowhere near out of the woods.

There have been just over 141,000 confirmed cases of the disease in the US, and there have now also been more than 2,400 deaths from it.

The dollar was also unable to command dominance in every single currency pair, either.

The Japanese yen, for example, was up slightly – which meant that the dollar dipped in this pair by a tenth of a percentage point.

It was noted at 107.81 at point.

In its pair against the offshore Chinese yuan, the greenback was seen up by 0.4%.

The offshore yuan is the version of the Chinese currency which is traded on the open market.

This is in contrast to the onshore version, which is used only in China.

The dollar was at 7.1132 following this rise, which came about following the decision of the People’s Bank of China to cut a major interbank interest rate.

This rate is the seven-day reverse repurchase rate, and the size of the cut was reported as being 20 basis points.

The move came as a surprise to the markets.

Elsewhere in the Asia Pacific region, the Australian dollar suffered a temporary big blow.

The currency, the fortunes of which are often linked to those of the Chinese economy, was down drastically in its pair with the greenback at one stage over the day.

However, it later managed to rise back up somewhat in this pair and was noted as being down only by about 0.3% at one stage – a position of $0.6149.

The dollar’s rise has come in large part as a result of traders and investors who are looking to liquidate their investments and access cash, perhaps in order to meet payment obligations in the uncertain economic environment.