Risk-on trading weakens as Fed signals willingness to help if coronavirus spreads

Fed Chair Powell tells congress the coronavirus’ impact on the Chinese economy may spill over to affect the US economy in which case the Fed stands ready to act.  The dollar sold off against most currencies as financial markets begin to view the impact of the virus as limited resulting in risk-on trading and selling of safe-haven assets.

“The very essence of instinct is that it's followed independently of reason”

Charles Darwin
  • FX Rates
    February 11, 2020

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  • USD

    Jerome Powell delivers his economic views before the House Financial Committee today for the first of a two day semi-annual testimony. The Fed is expected to reaffirm confidence in the economic outlook and steady monetary policy. The Democratic primary in New Hampshire tonight will be watched by markets for the emergence of a clear Democratic front-runner.  Markets have largely been pricing in a Trump re-election and could correct significantly should the Democrats put forward a contender.


    The pound strengthened today as GDP data came in better than expected, offset somewhat by worse than expected manufacturing data for December.  Some FX market participants are calling a low on the pound and expect the pound to strengthen to 1.35 before year-end.


    The euro was up against the dollar, but only slightly, as political uncertainty weighed on the common currency. Germany and Ireland are both facing political change as the economy stagnates across the eurozone.


    The loonie strengthened this morning as oil rebounded 2% off yesterday’s lows. Risk-on market sentiment helped the Canadian dollar and  equities.


    Japan’s yen slipped while the Australian dollar strengthened against the greenback.

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Peter Compton
Peter Compton

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