Divergence in Coravirus Responses Among Countries Provide Forex Trading Opportunity
                     Divergence in Coravirus Responses Among 
Countries Provide Forex Trading Opportunity

Coronavirus continues to be one of the more significant factors in determining 
the future direction of Forex markets. The divergence in the Covid-19 
situations in different countries can provide direction in corresponding 
currency pairs. 
The U.S. is an outlier in the severity of the coronavirus situation compared to 
much of the rest of the world. This can have a bearish effect on the U.S. dollar 
when trading against the currencies of other countries that have been effective 
in suppressing the infections within their borders.
Worrying coronavirus situation in US
The Covid-19 situation in the U.S. may continue to weigh on the U.S. dollar, 
especially if the rest of the world recovers relatively faster. Much of the 
situation has been exacerbated by the incompetent and arguably negligent 
response by the Trump administration. With the U.S. still at relatively higher 
rates of deaths in proportion of population compared to many other countries, 
it might be a good idea for Forex traders to identify countries which have a 
much lower spread of coronavirus. 
AUD/USD
One country which has seen much more success than the U.S. and most other 
countries in containing the spread of the virus is Australia. There are only two 
Covid-19 deaths for every 100,000 people in Australia while the U.S. has 26 
times more at 53 coronavirus deaths for every 100,000 residents. 
Australia has largely avoided the rate of infections of the rest of the world due 
to strict lockdown measures taken. Although this has undoubtedly hurt the 
economy, it has also cemented the public’s trust in the government’s 
leadership, profoundly contrasting with the deteriorating confidence in the 
U.S. government’s competence.
Despite the drag on growth due to coronavirus lockdown measures, economic 
data coming out of Australia has been notably positive. Manufacturing and 
services industry data is suggesting growth while June retail sales increased by 
2.7%. Also, The country’s trade surplus came in at 8.2 billion AUD in June which 
is an increase from the previous month at 7.34 billion AUD. 
Additionally, macroeconomic data from China, Australia’s largest trading 
partner, is also suggesting economic growth. All of these factors are bullish for 
AUD. When traded against the USD, the divergence between Australia and the 
U.S. on an economic, political and virus-management level, can provide 
significant market fluctuations which Forex traders could potentially capitalize 
on. 
Traders looking to profit on a strengthening AUD against the USD will need to 
register for an account with a solid Forex trading platform. This will provide 
you with access to the global currency markets where there is no limit on how 
much profit you can make.
NZD/USD
A similar dynamic also exists when trading the USD against the New Zealand 
dollar.
Similar to Australia, New Zealand has been largely successful in suppressing the 
coronavirus when compared to most of the rest of the world, including the 
United States. New Zealand has less than one death per 100,000 people due to 
Covid-19. Therefore, Forex traders with an account with a broker will be able 
to capitalize on this dynamic by shorting NZD against USD.
Weakness in US economy
Along with the poor response and incompetence of the U.S. government in 
slowing the spread of the coronavirus, there are some worrying signs for the 
American economy in recent economic data. 
Although housing and construction data is strong for the U.S., there are other 
economic metrics which suggest that the pandemic has caused significant 
damage to the economy. The United States NAHB Housing Market Index was 
78 in August, suggesting strong growth. Also, U.S. construction spending was 
actually 0.1% higher in June than during the same period a year ago in 2019.
On the other hand, there is worry that the American consumer is being 
propped up by the stimulus checks and extra unemployment benefits from the 
Federal government and if these relief measures are not reinstated consumer 
spending will stop fueling the economic rebound.
 Despite consumers delivering strong retail sales numbers in July, many are 
worried about their situation. This is apparent in the weak 
consumer sentiment reported during this same period. Also, the NY Empire 
State Manufacturing Index dropped more than expected in August.
If growth in the U.S. economy significantly worsens, it can further exacerbate 
the divergence between USD and NZD and AUD.
 This can provide opportunities to short the U.S. dollar. However, this will 
require that you have an account with a legitimate Forex broker offering a 
solid trading platform.