The dollar continues to free fall in the Forex market, maintaining a negative performance, meeting analysts’ projections.
August is just around the corner, the pandemic continues in many parts of the world, and the Coronavirus continues to rage. However, the effects on the economy that are beginning to be observed globally, are the late result of previous months.
Although the American currency is trying to rise, multiple obstacles still await you in the months to come.
The dollar does not seem to improve
Although many inexperienced traders saw the slight rise in the American currency as a good omen of an early improvement, expert traders and forex market analysts did not bet on this behavior. Rather, they kept their vision of a dollar in free fall in mind.
And while the dollar rose slightly on Friday, the currency has kept on track for its biggest monthly decline in a decade.
Analysts explain that the performance of the dollar is due to the concern that the increase in cases of COVID-19, may delay the American economic recovery.
Thus, confidence in the dollar was further quenched after Donald Trump raised on Thursday the possibility of delaying the presidential elections on November 3.
As a result, the dollar maintained gains after data showed on Friday that consumer spending, adjusted for inflation in the United States, emerged from the deep hole it fell into in April.
However, the dollar remains in free fall and below its pre-pandemic level.
American GDP falls to catastrophic figures
On Thursday, the terror of world economists became a reality, as the anticipated data on gross domestic product (GDP) showed a contraction of 32.9% in the American economy.
This is a scenario never before seen in the United States economy. This being the fastest rate of contraction since the Great Depression.
This event is already beginning to show its effects on the American economy. And the truth is that the effects are not positive for the dollar.
Dollar price to date
At the time of writing, the dollar index was trading at 93,365, showing a clear free fall. On Friday morning, it slipped, marking the downward trend, trading at 92,539, the lowest figure since May 2018.
But as the rhythm of the markets handles a behavior uneven to the figures of the world economy, the dollar recovered a little to quote 0.35%.
It has fallen more than 4% in July, which would be the biggest monthly drop since September 2010.
And most of the drop occurred in the past 10 days, as new cases of Coronavirus emerged in various U.S. states.
As explained above, it seems that the dollar is far from recovering.