Fear of coronavirus supports risk-off sentiment
News that more nations are struggling to curb the coronavirus is causing markets to shift to risk-off. The US dollar and Japanese yen have outperformed their peers on further signals that the virus is spreading. Reports out of Italy showed Europe’s biggest surge in infections.
Monday: US Chicago Fed Nat Activity
Wednesday: US New Home Sales
Thursday: US Durable Goods Orders, US Initial Jobless Claims
Friday: France CPI YoY, German CPI YoY, Canada Quarterly GDP Annualized
February 24, 2020
EUR/USD 1.0833 GBP/USD 1.2922 USD/CAD 1.3281 AUD/USD 0.6606 USD/JPY 110.834 USD/CNH 7.0384 USD/ILS 3.4272 USD/MXN 19.2236 USD/CHF 0.9780 USD/INR 71.9190
The US dollar is outperforming its peers on continued fear of the coronavirus affecting the global economy. The Bloomberg Dollar Index rose to its highest levels since October on Friday.GBPSterling dropped below 1.29 as markets moved to price in a 25 basis point rate cut at the Bank of England’s meeting in November. Previously, the markets were expecting that the central bank would hold rates through 2020.EUR
EUR/USD fell slightly, trading right above the 1.08 handle. The common currency weakened as core european bonds surged as risk-off sentiment strengthened following a virus outbreak in Italy.CAD
Fear that the coronavirus would result in a global growth slowdown caused the Canadian dollar to weaken. USD/CAD is up 0.5% trading at highest level since February 11.ASIA/PACIFIC
The Japanese yen strengthened from its weakest levels since May, leading the G-10 currencies. The yen fell to low levels last week on fear of a recession in Japan. AUD/USD fell to its lowest levels since March 2009. The Australian government may have to consider coordinating fiscal stimulus if global growth does not rebound.