Coronavirus Pressures Major Currencies Worldwide
The coronavirus is weighing heavy on the GBP/USD pair today as the Federal Reserve announced possible cuts in interest rates. Traders are pricing in on major rivals as they anticipate a 54% chance of it happening as soon as next month.
GBP/USD is treading around £1.2887 at writing.
Earlier today, the pound lost around £1.2860 after the UK published its mandate outlining priorities with the European Union. The parliament demanded the British Prime Minister Boris Johnson to halt trade talks in June unless he provides an outline.
Chief EU Negotiator Michel Barnier has yet to respond to negotiations, but both sides seem to disagree on EU rules.
Further, the release of accomplished expectations for Q4 in 2019 GDP provided the US a bullish recovery against the pound. The figure helped the currency, along with better-than-expected US Durable Goods Orders data published earlier this week.
The US is now one of the leading companies on coronavirus developments after the US President Trump increased its funding.
Analysts argued that further Fed rate cuts won’t “remedy” the COVID-19 virus. The Fed can only facilitate access to financial capital for those involved that incur cash flow problems.
However, it could also be a significant help to emerging market countries who have suffering currencies. The worst hit came from those involved with China, which is currently down by 0.28% at $6.9840 compared to USD.
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USD/JPY
Unfortunately for the US, coronavirus fears still brought brutal selling in equities, which boosted demand for traditional safe-haven assets. JPY strengthened against the American dollar by almost 0.77% at $108.73, pushing the US treasury down to record lows.
That said, the Japanese yen is today’s best performing G10 currency, retaining its safe-haven supremacy. This was because Tokyo January inflation rose by less-than-expected, which went up by 0.4% in a yearly comparison.
Furthermore, its advantageous Balance of Payment backdrop provided a cushion from the negative impacts from the epidemic.
EUR/USD
Meanwhile, the Euro is slipping below €1.10 against USD with the possibility of aggressive easing. Sell-off in the US and global equity markets are showing no signs of exhaustion.
The figure is still in danger despite upcoming jobs data and preliminary Consumer Price Index for February from Germany. Luckily, better-than-anticipated results in Germany and the Broader Euroland lifted some spirits among traders for potential recoveries in the region.
The dollar might find better support if the equity market sell-off stalls and the spending figure betters expectations.
Although the dollar still holds the wheel for both currencies, changes in monetary policies European Central Bank could change this.
