The US dollar index closed lower for a fifth consecutive day on Monday as hopes of a faster than expected global economic recovery from the COVID-19 pandemic took hold. Markets remained steady despite widespread civil unrest in the United States due to the death of George Floyd and ongoing US/China trade tensions.
Data from Johns Hopkins University indicates that coronavirus COVID-19 global cases have risen to 6,271,577 with 375,683 fatalities. Positive news came out of hard hit Spain on Monday, as health authorities reported no new deaths from the coronavirus in a 24-hour period for the first time since March. Countries around the world have started to ease restrictions, raising expectations of a return to normal life in the coming months.
US stocks made gains on Monday despite widespread riots triggered by George Floyd, a 46-year-old African-American who died in Minneapolis police custody. However, US stock index futures traded lower on Tuesday after President Donald Trump threatened to deploy military troops if state officials are unable to quell violent protests.
Speaking from the White House Rose Garden on Monday, Trump stated: “”I am mobilizing all available federal resources, civilian and military, to stop the rioting and looting, to end the destruction and arson and to protect the rights of law-abiding Americans, including your Second Amendment rights.”
Bloomberg reported on Monday that Chinese government officials told major state-run agricultural companies to pause purchases of some American farm goods including soybeans and pork. Chinese state media described the move as an unsurprising response to US criticism of the supression of pro-democracy demonstrations in Hong Kong.
Meanwhile, the Australia dollar, often used as a proxy for China, rallied to a 4-month high against the US dollar on Monday. This week’s manufacturing surveys from China suggested that its economy is improving. Positive economic news out of China typically lifts the Aussie, since it is Australia’s largest trading partner.
The risk-sensitive New Zealand dollar and Canadian dollar also rallied sharply on Monday as investors chose to focus on the positive news surrounding the coronavirus and shrugged off China/US trade tensions.
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