Safe-Haven Currencies Thrive Amid Novel Coronavirus Woes

Safe-haven currencies such as the Japanese yen and Swiss franc are seen gaining altitude in sessions this Tuesday’s trading in the FX market. The main reason? Investors’ concern over the novel coronavirus continues to outweigh stimulus hopes.

It’s no new news that the market is currently facing one of its biggest challenges with the COVID-19 outbreak. In fact, it’s not just the market, but the whole world, the safety of the people and the global economy.

So, during these times of crisis, safe-haven assets are glowing with hope and are attracting more and more investors.

The Japanese yen futures have seen a strong jolt on the latter half of February as more investors worry about the virus. The same goes for the Swiss franc, the beloved safe-haven currency of Europe.

However, prior to today’s trading, Central European currencies were seen rallying in trading sessions. Currencies from the aforementioned region rose due to the hopes of investors of possible stimulus from central banks.

Luckily for safe-haven assets, concerns of investors about the novel coronavirus greatly outweighed the stimulus hopes.

Fed Easing Rates

The Japanese yen and Swiss franc didn’t just do well against European currencies, both also gained against the US dollar. It’s worth mentioning that just recently, Jerome Powell, Fed’s Head, suggested rate cuts to support the economy amidst the virus.

But looking at the bigger picture, the Japanese yen and Swiss franc have immensely dominated the beloved greenback in forex trading. This suggests that hopes brought by the chances of a Fed rate cut didn’t stand a chance against concerns.

Experts and critics are pointing out that a rate cut isn’t the type of stimulus needed by economies during this time.

Thanks to the novel coronavirus, global stocks and oil prices also felt a powerful punch. Just last week, the stock market ran its toughest run in years due to concerns about the virus.

Gold prices, the franc, and the yen are the standouts in this time of glob as the risk appetite continues to grow.

European Currencies Aren’t Safe

Europe’s currency market isn’t shielded by the turbulence brought by the novel coronavirus. However, earlier this week, currencies from Central Europe saw a glimmer of hope for the forex exchange market.

Investors are hoping that the central banks from the region will release stimulus packages to support the economy.

Experts have heavily warned about the possible effect of the virus on the currency market. Adding that a stimulus package such as a rate cut may not be the support needed after all.

However, recently, the European Central Bank said that it isn’t ready to take action against the virus’ effect. And since then, the euro has been seen struggling to keep up in trading sessions.