🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

FOREX-Dollar and yen supported as coronavirus fears weigh on mood

Published 11/02/2020, 01:47
Updated 11/02/2020, 01:54
© Reuters.  FOREX-Dollar and yen supported as coronavirus fears weigh on mood

* Dollar, yen hold firm as safe havens

* For an Eikon page tracking the coronavirus, click here https://amers1.apps.cp.extranet.thomsonreuters.biz/cms/?navid=747389195

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Tom Westbrook

SINGAPORE, Feb 11 (Reuters) - The U.S. dollar and Japanese

yen were in demand on Tuesday, along with the bonds of both

countries, as worries about the spread of coronavirus had

investors heading for safe harbours.

The World Health Organization said overnight that the spread

of cases among people who have not been to China could be "the

spark that becomes a bigger fire". Coronavirus has killed 1,016 people in mainland China,

Chinese health officials said on Monday, though they also

reported a drop in the number of daily new cases. here https://amers1.apps.cp.extranet.thomsonreuters.biz/cms/?navid=747389195

for an Eikon page tracking coronavirus cases.

The dollar, seen as a safe haven owing to its position as

the world's reserve currency, stood by a four month high against

the euro at $1.0910 EUR= . Against a euro-heavy basket of

currencies it also stood at a four month high of 98.832 .DXY .

The greenback touched a three-month high of $0.6378 per New

Zealand dollar NZD=D3 , and at $0.6686 per Aussie dollar was

not far above the decade peak of $0.6657 hit on Monday AUD=D3 .

"It's been helped out by a lot of things," said Westpac FX

analyst Imre Speizer.

"The coronavirus hitting has money going into the U.S.

dollar," he said. "You've seen a good run of economic data in

the U.S., that's been another support ... the vulnerable ones

are the commodity countries like Australia and New Zealand."

China's central bank has moved to support the economy by

cutting interest rates and flushing the market with liquidity.

But with the extent of spread and its impact still unknown,

investors have dumped currencies exposed to China for dollars

and yen.

That left the yen fairly stable against the dollar - it last

sat at 109.75 yen per dollar JPY= - but gaining steadily on

other Asian currencies. Trading was subdued with Japanese

markets closed for a holiday.

The Australian and New Zealand dollars have dropped more

than 4% on the yen this year AUDJPY=D3 NZDJPY=D3 . The

Singapore dollar has lost 3% in as many weeks SGDJPY=R .

U.S. Treasury and Japanese government bond prices have

steadily climbed this year. US/ JP/

"The risk of a larger downgrade in Chinese GDP growth over

Q1 20 and 2020 as a whole is gaining momentum," said Richard

Grace, chief currency strategist at Commonwealth Bank.

"With China's economy accounting for some 17% of world GDP,

but accounting for a significant contribution to growth in the

global economy, the risk of a larger downgrade to global growth

is clear," he said.

"Upside in AUD/USD is limited, and downside risks continue

to mount."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.