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Riku Tanaka
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Forex
April 16 18:40

US Dollar claws its way up despite bleak global economic predictions; Italy’s bond yields up following failed ‘coronabonds’ proposal

Italy's bond yields up after collective 'coronabonds' proposal fell on deaf EU ears.
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The greenback was a popular currency on the European exchange Thursday (Apr 16), as outlines of the seriousness of the global economic collapse incited a rush to bid on havens.
At 3:05 AM ET (0705 GMT), the US Dollar Index, which tracks the currency against a basket of six other monetary standards, remained firm at 99.820, up 0.3%, while EUR/USD dropped by 0.2% to 1.0888 and GBP/USD dropped 0.1% to 1.2501. USD/JPY rose 0.3% to 107.75.
Last night, the IMF (International Monetary Fund) predicted that economic development in Asia will slow down to practically nothing this year.
“This is the worst growth performance in almost 60 years, including during the Global Financial Crisis (4.7 percent) and the Asian Financial Crisis (1.3 percent),” Chang Yong Rhee, director of the IMF’s Asia and Pacific department, said in a blog post.
However, Asia is believed to fare better in terms of its economic growth when compared to other global regions, he clarified.
This information rides on poor retail sales in the United States as the March figures plummeted by a record 8.7%. The market is yet to receive data for this week’s initial unemployment cases with an additional 5.1 million Americans projected to petition for unemployment benefits.
"The dollar is maintaining its momentum following U.S. data yesterday," said Kazushige Kaida, head of foreign exchange at Tokyo Branch of State Street.
Another point of interest is the growth of Italy’s bond yields after the 'coronabonds' idea failed to impress Eurozone’s finance officials. The growth of yields among the Europe’s periphery will put the euro itself under pressure.
Out of the EU nations, Italy’s has been hit the hardest by the COVID-19 pandemic, and as a result, the nation’s already strained public funds have been placed under serious pressure. The nation’s finance ministers, alongside the officials of hard-hit nations like France and Spain, have proposed a dept plan that would be spread obligation among the Eurozone and aid the recuperation from the pandemic’s economic effects. The plan however, fell on deaf ears.
Italy’s 10-year yields are currently back above 1.8%, said Danske Bank in an analytic note, which is the highest rate since before the ECB started its Pandemic Emergency Purchase Program.
“While Italian yields are still off the peak hit a month ago, the sell-off illustrates that member states' creditworthiness is back on the radar for investors,” said Danske Bank.