Abstract： COVID-19 ravages the world and profoundly affects the global economy. Today I will give you an overview of the impact of COVID-19 on the global economy **
The dollar strengthened against other world currencies yesterday, especially commodity-based currencies, amid falling oil prices. Currencies that are sensitive to oil movements are pressuring the dollar, with the US dollar strengthening 0.36% above the loonie, while the Norwegian krona and the Mexican peso have fallen 1.3% over the greenback. The dollar also strengthened ahead of the online EU summit, which will discuss how to overcome the economic impact of the pandemic crisis next Thursday. Differences of opinion are likely to occur, especially regarding coronabonds, which are demanded by the member states of the South European Union. Analysts see that low expectations for the summit member agreement could put pressure on the euro in the short term. The dollar index gained 0.19% to 100.02.
Canadian Dollar (loonie) is one of the currencies hard hit by falling oil prices. Oil companies in Canada and the US have been shaken by falling oil prices, but this decline will trigger the bankruptcy of oil companies, potentially weakening the loonie.
Gold prices rose about 1% yesterday, after briefly dropping to one-week lows as a fall in oil prices fell to their lowest level in 21 years, hitting risk appetite sentiment and pushing the transition of funds to safe haven assets. The spot gold gained 0.5% to $ 1692.26, after dropping to the lowest level since April 9 at 1670.50. While gold futures rose 0.7% to 1711.20. Falling oil prices have hit global stock markets, lifting safe haven assets. Even so, according to a reuters poll, the price of gold is likely to consolidate below its current high level due to the strengthening dollar and weak retail consumption.
WTI oil prices fell back to their lowest level in 20 years yesterday. WTI oil futures for May delivery had dropped 36% to hit the level of US $ 11 per barrel, while the June delivery contract fell 8% to US $ 22.78 per barrel and July delivery depressed 5%. The fall in oil prices was caused by concerns that US crude oil storage will soon be full. According to a Reuters report, the volume of oil stored at the point of shipment for the US WTI contract in Oklahoma, increased because the refinery was re-operating amid weak demand. Oil in tanker storage is estimated at 160 million barrels. Prices fell even though OPEC + recently agreed to cut output by 9.7 million bpd to stabilize prices. However, due to the Covid-19 pandemic, which caused a decline in demand, oil prices continued to decline.
Asian stocks are expected to follow the move of Wall Street which weakened due to the drop in oil prices into negative territory due to weak demand amid the Covid-19 pandemic that is damaging the global economy. Global stock markets fell and bonds rose after the May oil futures contract fell 306% to the lowest level of all time. The Nikkei index fell 2.02, while the global MSCI index fell 1.15%.
Author：Fanny Arianti Arief
Profile:
Fanny has started her self-learning of Forex since 2005 and has joined an Indonesian broker as a financial consultant in 2009. Through “trial and error”, she has learnt a lot from failure experiences. She is now a renowned trainers for the forex beginners and has helped the clients to get the profits from trade.
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