The US dollar appeared to surge ahead in the foreign exchange markets on Wednesday after fears around the impact of the ongoing coronavirus pandemic came back with a vengeance.
The development marked a shift in fortunes for the greenback, which has spent most of the week so far declining after traders began to be a little more optimistic about the potential trajectory of the virus.
However, the dollar’s status as one of the ultimate safe havens thanks to its extensive liquidity stood it in good stead on Wednesday as worries about the virus came back.
The development came as oil prices around the world went down.
This was as a result of fears that even a production cut agreed to by the Organisation of the Petroleum Exporting Countries (OPEC) might not be able to keep the value of crude oil high.
This spelled disaster for some of the world’s oil-dependent currencies, including both the greenback’s neighbour the Canadian dollar and the Norwegian crown.
The Norwegian crown was down by nearly 2% over the course of the day, which represented a significant decline.
The Canadian dollar was down by almost a full percentage point.
As trading got well underway on Wednesday, the greenback was up by half a percentage point compared to the early Asian session in the dollar index.
The index is a tool commonly used by traders to amalgamate and easily understand the dollar’s performance compared to several other major currencies from across the globe.
It was spotted at 99.40 after this rise.
Against the British pound, the dollar rose by nearly a whole percentage point.
It also rose by half a percentage point or so compared to the Swiss franc, despite the fact that the franc is also considered to be a safe haven.
It did not manage to surge to the same extent against the other major safe haven currency, the Japanese yen.
In that pair it rose by just a fifth of a percentage point.
In its pair with the single European currency, the dollar was again up by half a percentage point.
The rise for the dollar came despite the fact that traders spent most of the day expecting the worst in terms of domestic US retail sales figures.
These figures later revealed a slightly larger loss than predicted, with a change of -8.7% month on month in March.
The expected figure had been around -8%.
Looking ahead to tomorrow, the markets will have to contend with an unemployment rate release from Australia at 1:30am GMT.
This is expected to show a change from 5.1% to 5.5%.
Later in the morning, there will be a harmonised index of consumer prices release from Germany covering March.
This is due out at 6am GMT and is expected to show no change from its previous position of 0.1%.
A wholesale price index for Germany covering March will be out at the same time.
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