This Week Highlight - Dollar Flies High Again!

Since mid february to early March, the US Dollar (USDX) fell sharply from 99.50 high to 94.50 bottom after the pandemic outbreak caused the Dow market to plummet. The unprecedented rate cut in FED policy from 1.5 percent right down to Zero percent now has effectively slash the Dollar strength!

In an unanimous efforts by all other major central banks. the European Central Bank rolled out EUR750 billion of stimulus package to support market securities following the U.S. FED action. Meanwhile, Bank of England also cut the benchmark rate to 0.1 percent in 2 times within a month and also increased the asset purchase program to GBP645 billion. In Japan, the central bank injected USD137 billion equivalent in Yen to support the Nikkei market while PM Abe has vowed to lift the recovery in greater efforts than the Lehman crisis erupted in 2008!

On top of all these spontaneous stimuli, the Int'l Monetary Fund vows to standby EUR50 billion fund to aid those needy countries to fight the coronavirus outbreak!

With all the stimuli packages rolled out by European central banks and major Asia countries, it is necessary to make such actions in order to smoothen their national exports, otherwise the high rising domestic currencies against Dollar will kill the survival of international trades. Hence, Dollar has become a safe haven and all global fund flight into Dollar after European currencies weaken tremendously!

Looking at current situation, there is a shortage of Dollar liquidity as the global traders need to pay Dollar for settlement after longed heavily on the European currencies on the topside before the plummet. As of now, the US Dollar Index (USDX) has reached 104.00 high that was created in January 2017. What we foresee is that the greenback might climb bit higher in coming months to short-squeeze the market!

Not surprisingly, we presume the range could fluctuate from 100.00 - 109.00 till Q3 season of this year. Many commodity traders and international importers will sob and multiple businesses will face huge challenge in surviving forward. We wish you will be well and be fully prepared for this currency war!


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