Trump and coronavirus: dollar made a weak attempt at corrective growth

The US currency showed a corrective growth at the start of trading: the dollar index rose from 95.933 to 96.13 points during the Asian session. The upward dynamics is uncertain, and is primarily due to the comments of US President Donald Trump. The head of the White house once again voiced optimistic rhetoric about the situation with the coronavirus, despite the fact that the United States recently reported another anti-record. However, the increase in the number of infected COVID-19 significantly decreased on Sunday, and this fact, together with Trump's comments, helped the greenback in suspending its fall and demonstrating a correction.

So, over the past week, or to be more precise, from July 14 to 18, a stable increase in the number of patients with coronavirus was recorded in the United States. If the daily increase was 59,000 cases on the 14th, then a new anti-record was registered on the 18th of July: 85,000 infected in 24 hours. But yesterday, the indicator fell by almost half – 45,000 patients were identified during the day. Here we can not talk about a change in the situation (45,000 daily growth is in still a high indicator), but the sharp decline relative to the previous days had a positive impact on the US currency.

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In addition, Trump made it clear that he does not intend to close the country to a strict quarantine. In an interview with Fox News, the US President said that the number of infected people in the country has increased only because the country began to conduct significantly more tests for COVID-19. At the same time, he assured journalists that the majority of infected people are young people who show only mild symptoms of the disease: "they only have a runny nose, they will soon recover." As for the death rate, here Trump refused to accept the data from Johns Hopkins University at all, saying that the death rate from coronavirus in the United States is "one of the lowest in the world", despite the fact that the total number of people who died from this disease exceeded 140,000. According to Trump, the statistics of Johns Hopkins University are not correct, since they include deaths from concomitant diseases.

Actually, Trump's argument is not so important in the context of the currency market. His words can be treated in different ways, but the essence of this does not change: the White House is not going to repeat the spring scenario, when the American economy was actually frozen. This is a key message that matters for dollar bulls.

Trump's position helped the dollar go into correction. But the corrective growth is clearly uncertain. In my opinion, investors do not trust Trump too much, who says black and white. And it's not just about trust or distrust: the main problem for dollar bulls is that the quarantine can be imposed locally. This is not a problem if it concerns one or two states, but at the moment there are outbreaks in many southern and western regions of the country. First of all, we are talking about the southern states, which for a long time delayed the introduction of restrictive measures and mandatory wearing of masks. The leaders of anti-rating are Florida, Texas and Arizona. The center of the epidemic in the United States at the moment is Florida, where almost 340,000 patients with COVID-19 and more than 5,000 deaths from this virus have been recorded. A curfew has already been imposed in some parts of Miami: people are forbidden to appear in the evening in the most popular tourist districts. According to local doctors, other major cities in the south of the country will have to resort to such measures.

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Such a contradictory fundamental background does not allow the US currency to demonstrate strong growth throughout the market. Most of the currency pairs were flat during the Asian session, despite the upward trend in the dollar index. Buyers of the USD/JPY pair showed the most activity, having risen from the bottom of the 107th figure by more than 50 points. However, this price spike was also within the wide-range flat. The pair has been trading within the 107th price level since June, only occasionally leaving the specified price niche. Therefore, in this case, when approaching the borders of the 108th figure, we can consider short positions to the bottom of the 107th figure. Uncertain positions of the US currency will not allow buyers of USD/JPY to develop an upward trend, which means that the pair will return to the lower border of the above price bands(106.90-107.00) in the mid-term.

The material has been provided by InstaForex Company - www.instaforex.com