Market maintains appetite for safe haven assets as coronavirus creates concern for global growth
The US dollar and Japanese yen are trading stronger than their peers as markets speculate that the spread of the coronavirus could impact global growth. The European Central Bank announced that it would maintain its key interest rate at -0.50%. EUR/USD hit lowest level in 2020 following the release of the decision.
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January 24, 2020
EUR/USD 1.1034 GBP/USD 1.3094 USD/CAD 1.3133 AUD/USD 0.6844 USD/JPY 109.5500 USD/CNH 6.9271 USD/ILS 3.4538 USD/MXN 18.7773 USD/CHF 0.9704 USD/INR 71.3313
US dollar is higher on concerns that the coronavirus will impact global growth. The only US data release of note today is preliminary January Markit PMIs.GBPSterling slipped below the 1.3100 handle after the UK’s Purchasing Managers’ Index hit highest level since January 2018, potentially undermining a rate cut at next week’s Bank of England meeting. Markets are still pricing in a 60% chance of a rate cut.EUREUR/USD fell to a YTD low of 1.1026 after the European Central Bank kept its monetary policy unchanged at -0.50%. ECB President Christine Lagarde, stated signs of “moderate increase in underlying inflation” and that the outlook for economy is “somewhat less pronounced.”CADUSD/CAD retreated from previous highs falling as low as 1.3119 in reaction to rebound in oil prices and higher gold prices. The Canadian economy is emerging from a slow period of growth at the end of 2019 and is vulnerable to stunted growth from the coronavirus.ASIA/PACIFIC
The Japanese yen hit a two-week high amidst the concerns of the impact of the coronavirus on global growth. The outbreak of this virus has so far killed 25 people - all in China. New cases of the virus have been documented in Singapore, Vietnam, Japan and South Korea.