Forex: The Dollar remains firm following concerns about the coronavirus

By Peter Nurse

The return of risk aversion to financial markets on Tuesday resulted in more gains for the us dollar, amid concerns about the extent of the damage caused by the coronavirus in China, but the british pound is also showing signs of strength.

At 10: 15 am, EUR / USD was trading at 1,0829, near the bottom of 1,0823, the lowest level since April of 2017. The US Dollar Index, which tracks the greenback against a basket of six other currencies, was $ 99,073, after having climbed up to 99,132, still to heights never before seen for more than two years. GBP/USD was trading at 1.30, down only 0.1%. In addition, the pair USD/CNY rose 0.3%, climbing to 7,0022, and returning to the level above the 7 physiologically important.

The australian dollar also traded lower after the reserve Bank of Australia reiterated that low interest rates will likely be needed for a long period of time, which indicates concerns about the coronavirus.

At 10: 15 a.m., the AUD/USD pair has lost 0.6% to 0,6675.

The number of new cases Covid-19 is dropped to 1 886 Monday, compared with 2,048 the previous day. However, the World Health Organization warned Tuesday that “every scenario is still on the table” in terms of the evolution of the epidemic.

Add to this the warning from technology giant Apple (NASDAQ:AAPL), according to which he does not expect to meet its earnings forecast for the quarter to march, a senior chinese official stating that the virus Covid-19 would have an impact “major” on the chains of production and supply of February; and from sources such as Capital Economics stated in a report that it is now practically certain that the chinese economy will contract in the first quarter, and it is not surprising that the dollar, which is often seen as a refuge, to be searched.

The british pound is a candidate less likely to purchase, but it rose strongly against the euro weakens.

The pound sterling ended last week on a positive note after the resignation of the chancellor, Sajid Javid, “many have taken this as an indication that the team Boris Johnson is preparing a fiscal stimulus plan most important of which will be announced in march,” said John Hardy, head of forex strategy at Saxo Bank. “The prospects of a rebound in the economy with fiscal policy doing the bulk of the work would allow the Bank of England to keep the rate unchanged for the moment.”

This has led to the fall of the euro to its lowest level against the pound since the December elections and just after the vote for the Brexit in 2016.

At 10: 15 am, EUR/GBP was trading at 0,8334, near the bottom of 0,8327 observed earlier on Tuesday.

Other losses are possible with the ZEW German at 11: 00 is likely to show a sharp decline in confidence in the largest economy of the euro zone, in what is the first indicator of feeling post-coronavirus. In addition, the employment data in the United Kingdom, a half-hour earlier, should show that the labour market remains healthy.

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