This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback's traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.
Currencies markets have continued the recent flight to safety due to the spread of the Coronavirus in other countries such as South Korea, Japan and Singapore besides China, raising concerns the virus and effects on economies, business and travel will linger for some months to come.
The US Dollar has been safe haven of choice with the better yields on US deposits vs the Japanese yen, in fact at the time of writing the dollar to yen rate has spiked above 112.0 (USD/JPY 4-DAY ▲ 2% 🔔)
The euro continues it downwards path with EUR/USD being flagged with a myBER alert for 90-DAY LOWS🔔.
According to XE‘s daily report, “There is always risk that the market can gap over the weekend and open sharply lower, but I would say that risk is elevated this weekend. We have a lot of manufacturing data out of Europe tonight, and then the US tomorrow morning. I think if European data is poor, this will be clearly risk off.”
Virus plus unemployment rate hurts Aussie
We have downwards pressure again on AUD with the unemployment rate unexpectedly rising to 5.3%, the RBA is now predicted by the market to announce a rate cut from 0.75% to 0.50% earlier than previously anticipated mid-2020.
The double whammy of the coronavirus has pushed AUD/USD (4-DAY ▼ 1.6% 🔔) down towards US66¢, close to an 11-year lows.
The Kiwi dollar has also dropped over 6% so far this year with NZD/USD at 0.6335 and is at 60-DAY LOWS.
The pound has fallen against the USD with GBP/USD at 60-DAY LOWS🔔. The rate was weighed down by US dollar strength against the majors and uncertainty around the upcoming EU/UK trade talks.
However, due to prolonged euro weakness GBP/EUR at 1.1939 is trading 1.3% above the 90-day average.
Currency rates were extremely volatile last week as the coronavirus situation worsened day by day with various countries implementing ever-tougher measures to stop the spread of the disease.
Last update: 23 Mar, 2020
The strong start to the year for “risk-on” currencies is already a distant memory.
Posted: 3 Feb, 2020
The threat of a proxy war between the US and Iran in Iraq has pared back some of the recent gains of “risk-on” currencies.
Last update: 8 Jan, 2020