- The US dollar index declined today as Trump confirmed that he had contracted Covid-19.
- The index is also reacting to the latest nonfarm payroll numbers.
- The US economy added more than 660k jobs while the unemployment rate fell to 7.9%.
The US dollar index (DXY) rose by more than 0.10% as investors reacted to news that President Trump had contracted Covid-19. The index is also reacting to the relatively strong nonfarm payroll numbers from the US.
Trump tests positive for Covid-19
The US dollar index rose as investors rushed to the safety of the greenback after Trump tested positive for Covid-19. The index rose as the US dollar gained against the euro, Canadian dollar, and Swiss franc. It nonetheless fell against the Swedish krona, Japanese yen, and the British pound.
In a statement earlier today, Donald Trump said that he and the first lady had tested positive for the virus. The report came two hours after he announced that Hope Hicks, a close aide had tested positive for the illness.
This news caused shivers around the world, with European and Asian equities tumbling. In the United States, futures tied to the Dow Jones and S&P 500 declined by more than 1.25%. Similarly, in Europe, the DAX index and FTSE 100 declined by more than 0.50%.
The dollar index rose as investors predicted significant risks in the coming weeks. For one, they are unsure how many senior leaders have contracted the illness. For example, according to the New York Times, Trump has interacted with Vice President Pence and other senior leaders. Also, there is the risk that the US will have a contested election in November.
US nonfarm payrolls
The DXY is also reacting to the official nonfarm payroll numbers from the United States. According to the Labour Department, the US added more than 661kk jobs in September. The median estimate by economists polled by Reuters was 850k jobs. The economy added more than 66k manufacturing jobs as the private nonfarm payrolls rose by 877k. At the same time, the unemployment rate dropped to 7.9% in September while the participation rate fell to 61.4%.
On Wednesday, data from ADP showed that private employers added more than 740k jobs. And yesterday, data showed that jobless claims dropped to a six-month low of 837k.
Still, the labour market in the US is fragile. For one, the economy needs to add more than 9 million jobs to get to pre-pandemic levels. This will be a toll-order considering that most of these jobs have disappeared forever. For example, just this week, major airlines and Disney have said that more than 60,000 jobs were at risk.
US dollar index technical outlook
The daily chart shows that the dollar index found strong resistance close to the 23.6% Fibonacci retracement level at $94.74. Since then, it has dropped for the past four consecutive days. It is also along the middle line of the Donchian channel. But, the three lines of the channel are pointed upwards. That means that the price is likely to resume the upward trend as investors fade the news on Trump. Want to start trading? Find our review of the top brokers here.