Dubai, United Arab Emirates-Tuesday 4 August 2020 [ AETOS Wire ]
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Coronavirus
pandemic, and the U.S – China trade tensions have recently hit the U.S
extremely hard, which has resulted in a GDP falling a historic -32.9% in
Q2 of 2020, slowing down from -5% in the previous period. Meanwhile,
the US has already spent $3 trillion propping up the economy since the
pandemic struck in March, which helped the short-term economic recovery
from mid-April to June.
Reasons for USD sell-off and Technical Outlook
The
greenback still struggling to find an upside momentum as concerns over
the mounting number of infections, uncertainty around the next round of
stimulus package and escalating tensions between the US and China.
Moving ahead, the investors eagerly waiting for the next round of
stimulus, the US is preparing further support for the economy. On the
last FOMC meeting, The Fed Chairman Powell hinted that the economy would
need additional support measures to cope with the outbreak of the
economic crisis.
The
Dollar index has broken down below 93.50 and at the time writing the
currency pair sitting on key support at 92.50. Any break below 92.50 the
next support at the 92/91.80 level and on the upper side the immediate
resistance can be found at 93.50 and then 94.
When will the US economy recover?
Yet
since then, the US has suffered a surge in new coronavirus cases, the
country is still struggling to contain infection rates and deaths from
COVID-19. According to the latest figures published by Johns Hopkins
University in the US, there have been 4,294,770 confirmed cases and
148,056 deaths, with 1,325,804 people recovered from the virus. On the
other hand, the tensions between US-China continue to escalate following
the closure of China’s Houston, Texas consulate. In retaliation, China
has ordered the U.S. consulate in Chengdu to cease operations.
So,
until a vaccine or effective treatment for Covid-19 is available, the
recovery of the U.S economy will not really get underway till the mid of
2021. However, the use of the potential vaccine can only be expected in
early 2021.
"The
economic costs of the crisis are being borne disproportionately by the
poor and vulnerable, bringing into stark relief deep inequities that
have long afflicted the US," the IMF said.
Contacts
Syam K.P.
Chief Analyst
Gulf Brokers
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