Link (URL): https://www.cnbc.com/2020/03/15/powell-says-the-fed-doesnt-see-negative-rates-as-appropriate-policy-for-the-united-states.html

 

Comments:

The essence of this article is to highlight the rejection of Negative Interest Rate Policy (NIRP) as announced by Federal Reserve Chairman Jerome Powell. He clarified that it is highly unlikely to implement NIRP as a means to stimulate the US economy amid impacts of coronavirus epidemic. Furthermore, he stated that the Fed will utilise other liquidity schemes such as interest rates cut and quantitative easing. Thus, this provides crucial information for our forecast as the rejection of NIRP suggests that the interest rates will not drop lower than 0, meaning the interest rates are higher than Eurozone where current ECB deposit rate is -0.5%. According to interest rate parity, this may indicate a bearish trend for EUR/USD, with USD appreciating against EUR. Thus, this article about interest rates gives us a direction to our forecast report. 

 

2. Coronavirus outbreak to drive retreat to safe-haven currencies - Reuters poll

 

Link (URL): https://www.reuters.com/article/uk-forex-poll-dollar-poll/coronavirus-outbreak-to-drive-retreat-to-safe-haven-currencies-reuters-poll-idUSKBN1ZZ023

 

Comments: 

This article depicts how the coronavirus outbreak impacts safe-haven currencies like USD. Amid uncertainties of the global pandemic, many investors opt for risk-off moves by investing in safe-haven currencies instead. Reuters poll regarding coronavirus involves professional opinion from 52 analysts, with majority agreeing that the dominance of USD will last for a period longer than 6 months. This article also mentioned that the US dollar index is forecasted to increase by a maximum of approximately 3%, in the case of worsening conditions for the outbreak. However, the article also mentions the uncertainties of when the effect will last, and expects it to be a short-term dominance for USD. In short, this article displays the effect coronavirus outbreak has on the performance of USD. Therefore, this article shows that we would expect USD to be bullish In the short term due to the increased investments in safe-haven currencies like USD. 

 

3. The U.S. Is About to Vastly Increase Its Debt. That’s a Good Thing

 

Link (URL): https://www.nytimes.com/2020/03/27/upshot/stimulus-national-debt-coronavirus.html

 
Comments:

This article explores an interesting and unconventional view to government debt in US. Generally, higher debt is regarded a determinant that will lead to a lower currency. However, due to the impact of coronavirus to the economy, this massive borrowing of 3 trillion is deemed necessary to conquer Covid-19 pandemic that has forced the economy to a standstill. If this borrowing scheme is effective, it will cushion the blow to growth, and the economy will pick up faster, and that would have positive spillover in terms of debt dynamics. Thus, although we cannot conclude that the USD will appreciate, this article displays a positive perspective to the government debt decision as it may suggest a positive outlook to the US economy in the near future, which will ultimately have positive implications on USD.

4. The coronavirus outbreak is letting the safe-haven dollar shine

 

Link (URL): https://edition.cnn.com/2020/02/11/investing/safe-haven-dollar-coronavirus/index.html

 
Comments:

This article provides crucial insights to the extent and underlying reasons for USD’s dominance amid the coronavirus epidemic. It mentions the tendency for investors to sell riskier assets like stock and bonds and take safety in cash, specifically US dollars. Demand for USD increased significantly as the economy seems riskier. Evidently, if demand of USD increases due to these reasons, USD will strengthen. This article also explains that positive sentiment towards the US stock market and expectations that the virus's impact will be relatively smaller in the United States drives these safe-haven investments. Thus, this article further reinforces the fact that many investors would opt for dollar-denominated assets and investments, securing the demand for USD during global uncertainties. 

5. Deloitte United States Economic Forecast: Update April 2020

Link (URL): https://www2.deloitte.com/us/en/insights/economy/us-economic-forecast/united-states-outlook-analysis/april-2020.html

Comments:
In the United States economic forecast by Deloitte, it provides a thorough overview on the current economy amid the Coronavirus outbreak. The main highlights relevant to our report is its mention regarding interest rates. It mentions that prior to the COVID-19 outbreak, investors were looking for return in high-yield bonds but several companies that issued those high-yield bonds are about to experience steep declines in revenues. Thus, investors are now heading towards a risk-off move. The report also mentions about the federal deficits relating to costs to combat effects of coronavirus to the economy, which provides insights to how we interpret USD’s movement due to government debt. Lastly, the article also explains how coronavirus outbreak contributed to the drop in oil prices, leading to low inflation rate to be expected. Thus, this article can help us to have a clear direction for our USD forecast report.

 

2. After trying for a decade, central banks might succeed at generating inflation
 
Link (URL):
https://www.cnbc.com/2020/05/11/central-banks-might-succeed-after-trying-for-a-decade-to-generate-inflation.html
 
Comments:

For the past decades, central banks around the world have been trying to generate a healthy inflation. The U.S. Fed, in particular had set a target of 2% inflation in view to boost the inflation this year. According to Chetan Ahya, chief economist at Morgan Stanley, inflation is predicted to surge starting from 2022. However, due to the recent recession, most economists are expecting a low levels of inflation in near future (within 2020). This is mainly due to the social distancing rules that has led to economy shutdowns and the decreased in overall costs. However, after the Covid-19 pandemic crisis (expected to be after 2020), the disinflationary trend is expected to fade and give way to reflation and subsequently, an inflation.

 3. The US dollar is considered a safe bet — even in these coronavirus days. Here’s why

 Link (URL):
 https://www.cnbc.com/2020/04/29/why-the-us-dollar-is-still-considered-such-a-safe-currency.html
 
Comments:

As the Coronavirus continue to affect economy around the world, the USD has been considered as one of the safest assets to be held by investors. This is because various reserves around the world and daily transactions are done in USD, and prominence of alternative currency doing the same work is less likely to occur in near future. The dollar is mostly outside its borders with more than USD 1.8 trillion of the greenback circulating around the world. Moreover, most of the investors also think that America has a very stable politic and economic condition which can secure the stability of dollar. 

 4. The US is becoming the king of debt. It's a necessary risk

Link (URL): https://edition.cnn.com/2020/05/06/business/us-debt-deficit-coronavirus/index.html

Comments:
This article explains how US got into so much debt and why it is necessary. The US has a debt-to-GDP ratio of around 80% even prior to the Covid-19 outbreak. Meanwhile, the Treasury Department is poised to borrow another USD3 trillion this quarter in view to rescue the economy standstill due to the pandemic. However, this increase in debt deemed necessary. This is because economists believe that there would not be enough economy left to repay the debt after the crisis if this spending is not done. The deficit is absolutely necessary to tackle the destructive impact of economy standstill to avoid another recession. Moreover, this spending is temporary and emergency in nature and therefore would stop once the crisis is over. Furthermore, as the Fed has decreased the interest rate to near zero, it makes borrowing less costly at the moment.

5. United States of America: Policy Responses to Covid-19

Link (URL):
https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19#U
 
Comments:
The Covid-19 Pandemic in the U.S. has taken lives of some 91,000 Americans and affected over 1,528,000 individuals across 50 states, while clashing the economy. American government has taken various responses in tackling this issue. Firstly, under Paycheck Protection Program and Health Care Enhancement Act, USD483 billion was issued to help businesses, and retaining of employees. On top of that, the Federal funds rate were lowered by 150bp in March to 0-0.25bp, USD swap lines were broadened to more central banks and cost of swap lines were reduced. 
 

6. US dollar is still king, even as coronavirus slams country

Link (URL):
https://www.straitstimes.com/business/economy/us-dollar-is-still-king-even-as-coronavirus-slams-country

Comments:
This article depicts how the dollar retains its strength despite the economic depression caused by the pandemic. Although the virus has cause massive unemployment and a standstill in economy, but it has not dethroned the value of USD. In contrast, the value of USD has actually risen by 6% from its lower point reached in early March. According to Kit Juckes, global head of foreign exchange strategy at Societe Generale, USD has exorbitant privilege as many people demand for dollars. Another explanation for the attractiveness of the dollar is the urgent need for cash for businesses as the recession drains their profits. Besides, the currency is most widely-traded on the forex market, and the Fed has confirmed to allow currency exchanges with overseas’ central banks last month so that they could raise dollar reserves. As evidence, USD has risen by 3.5% against EUR since 1^st Jan. The collapse of oil prices also aided USD to appreciate against Russian ruble, Canadian dollar and Norweigan krone.

 

Link (URL): https://www.cnbc.com/2020/04/29/fed-decision-fed-pledges-to-keep-rates-near-zero-until-full-employment-inflation-come-back.html

Comments:
This article focus on the interest rate policies from the US Federal Reserve to cope with the economic recession due to the pandemic. The Feds has announce that the US interest rate will be kept low at the range of 0% - 0.25% and this policy will remains until the inflation rates and employment recovers. The article also address on several initiatives that the Fed Reverse took to improve the US economy as the pandemic has put a heavy weight on the US’s economy. The article had informed us that the risk free interest rate of US will be low but not negative through the coming months.

2. EUR/USD to Snap 2-Week Losing Streak, but Gains Unlikely to Continue

Link(URL):
https://uk.finance.yahoo.com/news/eur-usd-mid-session-technical-130442207.html

Comments:

The article comments on the opinions of Bank of America regarding the EUR/USD rates. It argue that the USD will continue to appreciate against the EUR as due to the response of Europe countries and the EU to the pandemic was not as strong as the US only until Germany and France initial a package. However, the bank thinks that this is a good move but lack of consideration for long term effects and it is critic to be a unsustainable debt dynamics" in the eurozone periphery. This article allowed us to identify a long term force that drive the USD strength upwards.

 

Link (URL):

 

Comments:

The article provided a forecast for the US’s economy for the future through information from the 1^st quarter of 2020, taking account for the effects of the Coronavirus pandemic to the current situation where economic growth in the US is relatively moderate. The impacts on several sectors which includes the consumer spending, housing, foreign trade and business investments is covered in this article. Particularly, the article mentioned the effects of falling oil price on the price in US which could ultimately contribute to a certain extend on the fall in inflation rate in US. This article provide us with some evidence on the low inflation rate forecasted for the year 2020.

 

 

Link (URL): https://uk.reuters.com/article/us-forex-poll-dollar/u-s-dollar-set-to-keep-shining-through-coronavirus-pandemic-reuters-poll-idUKKBN22J00H

 

Comments:

The article talk about the role of USD as a safe haven for investor amidst the CoVid-19 pandemic as risky investments are now likely to be avoided by investors who aimed to preserve their capital. The strength of USD will remain strong for at least another 3 months  while most other major currency are experiencing deep loss as the world is now bracing for a slow recovery instead of a quick one. However for long term, USD performance might fall as some gains on the reserve currency is given up. In a long run, other major currency will only able to catch up at least after 12 months. The article provided us with some information on  why investors moving their funds back to US amidst the pandemic and could leads to a surge in demand in short term and subsequently affects the USD’s exchange rates.