Tuesday was clearly a difficult day for the United States Dollar, seriously affected by the expectations of a possible Federal Reserve interest rate cut, in an attempt to relieve the pressure on the economy, caused by the outbreak of the coronavirus in China.
The USD, a safe-haven. But for how long?
Last week, the dollar managed to rise to its highest in a lot of years, as the virus was discovered in other regions of the world, as investors saw safe havens into U.S. assets. Still, it is believed that the Federal Reserve will eventually be inclined to cut rates since there’s a lot of room for this.
Against several big currencies, the USD reached 99.29, after being very close to 100 one week ago. However, considering that there isn’t any good news regarding the crisis created by the virus, just a few analysts believe that the dollar will eventually give back a big chunk of its most recent gains.
Finally, on Tuesday, market gauges of implied volatility in euro/dollar eased on, following their rise to their highest since October, registered this Monday.
The yen, to lose its status?
In a recent statement, Japanese Prime Minister Shinzo Abe admitted that some clusters of coronavirus cases had already emerged in the country and the government is currently trying to fight contagion. Therefore, Asian investors had some solid reasons to avoid the Japanese Yen, which started losing its safe-haven status.
Last time, the yen traded up 0.2% at 110.47 per dollar.
As for China, it recently reported a new rise in cases in the Hubei province, otherwise the epicenter of the outbreak, while the rest of the country saw the fourth day of declines.
The yuan was last up 0.1% at 7.0280 per United States dollar in the offshore market, after reaching a five-day high.