On Thursday, the US dollar is making gains and strengthening against its major peers as its safe haven appeal comes back into focus over recent disappointing economic data releases from the US as a result of the coronavirus pandemic. At the time of writing, the US dollar index DXY is trading around 99.90.

With economic activity winding down across the US as in several other parts of the world for to coronavirus, retail sales fell sharply by 8.7% in March while manufacturing output declined by 6.3% in the US as a result of the shutdowns. While the weak figures should typically have served to weaken the US dollar, it helped boost its appeal as a safe haven currency in the wake of heightened recession risks instead.

Meanwhile, the New York Fed’s Empire State Manufacturing Index fell 57 points lower to touch -78.2 for the month of April, the weakest reading ever recorded. These recent data releases point to not only a severe downturn in the US economy but also indicate that economic recovery could take longer than previously anticipated.

According to estimates by ING, the US GDP could contract by as much as 13% as a result of the ongoing pandemic. While economic activity could begin to resume by as soon as mid-May, complete recovery of economic output can be achieved only by around 2022, with business activity taking several months to resume to normal levels.