Dollar higher as virus concerns hit markets worldwide
The dollar, yen and Swiss franc all made gains overnight, serving as safe-haven currencies after global markets sold off. Concerns about the spread of the coronavirus dominates global news. There is a full economic data calendar this week, and the Fed and Bank of England meet.
Monday: Germany IFO Business Survey (Jan) / Census Bureau reports New-Home Sales (Dec)
Tuesday: Conference Board releases Consumer Confidence Index (Jan) / Case-Shiller 20-City Home Price Index
Wednesday: Federal Reserve meets
Thursday: Bank of England announces monetary policy decision / US advanced estimate for Q4 GDP Growth
Friday: UK Brexit Day / US Personal Income (Dec)
January 27, 2020
EUR/USD 1.1023 GBP/USD 1.3059 USD/CAD 1.3189 AUD/USD 0.6768 USD/JPY 108.956 USD/CNH 6.9819 USD/ILS 3.4567 USD/MXN 18.9137 USD/CHF 0.9692 USD/INR 71.4520
The dollar index gained overnight, as investors dumped equities, commodities and foreign currencies amid worries about the coronavirus. Increased demand for safe-haven bonds drove UST 10-year yields down to 1.62%. The Fed meets this week and they are expected to hold rates steady.GBP
The UK pound is slightly lower as traders focus on Thursday’s Bank of England meeting. Odds are near 60% for a rate cut amid economic uncertainty related to Brexit. Friday is Brexit Day, when the UK officially leaves the EU. Amongst other issues, the deal says the UK will leave the EU ‘customs union’ and have the right to develop new trade agreements with other countries around the world.EUR
The euro made early gains following news in Italy that a key regional vote did not support a candidate of far-right Matteo Salvini’s party. Also, credit agency Fitch upgraded Greek debt, which led to an all-time low in yield of 1.13% in 10-year Greek sovereign bonds.CAD
The Canadian dollar weakened by 0.25% overnight due to a broadly stronger US dollar, lower commodity prices, and a downward revision of Canada’s job data for 2019.ASIA/PACIFIC
The Chinese yuan fell slightly and Asian equities collapsed on fears of further spreading of the coronavirus from China.
The Japanese yen made gains as a safe-haven currency amid growing virus fears.