Dollar in Demand Bolstered by Safe Haven Status
On Tuesday, the U.S. dollar continued to be in demand in the foreign exchange market. The matter happened after its safe-haven status boosted the currency as the coronavirus epidemic persists to spread.
Moreover, there were signs of strength from the U.S. economy.
Meanwhile, the EUR/USD pair exchanged at 1.0911 in forex trading. It was marginally up on the day, after tumbling to a four-month low last Monday.
On the other side, the GBP/USD pair traded at 1.2909. It is 0.1% lower, having reached a two-month low of $1.2870 also last Monday.
Futures on the Dollar Index that tracks the greenback versus a basket of six other currencies remained at 98.773.
It is above 0.1%, having soared as high as 98.858 on Monday. The measure was at its highest level since mid-October.
However, the death toll from the coronavirus continues to mount. It is alleging over 1,000 victims in mainland China and contaminating over 40,000 people.
In a research note, analysts at Nomura indicated that the measures of resuming laborers and passenger traffic flow within China recommended the virus had “a devastating impact on China’s economy in January and February.”
For the last couple of weeks, the anticipation of smaller Chinese demand kept the commodity-like currencies on the cautious side.
The issue is along with the Aussie dollar that is still close to a 10-year low as well as the Brazilian real, Russian ruble and South African rand all declining by between 3.7% and 5.6% over the last month.
Further Movement in the FX Market
In a piece of FX News, Westpac FX analyst Imre Speizer said, “The coronavirus hitting has money going into the U.S. dollar.”
Speizer added, “You’ve seen a good run of economic data in the U.S., that’s been another support.”
Last Friday, the U.S. nonfarm payrolls for December maintained to demonstrate steady employment growth.
Meanwhile, sentiment evaluations have tended to blow to the upside.
Elsewhere, attention now shines on the testimony from Federal Reserve Chairman Jerome Powell to Congress on both Tuesday and Wednesday.
The Fed has made clear about its objectives to keep alert on its actions regarding interest rates in the near future.
Moreover, interest will be the release of the U.K. gross domestic product figure for the fourth quarter of 2019.
At the end of 2019, the U.K. economy almost barely avoided a contraction with some poll forecasting of no progress on the quarter, causing in annual growth of 0.8%.
A little upside shock may boost a weak pound. On the flip side, the tricky trade discussions with the EU are expected to leave sterling on the back foot for the foreseeable future.
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