By Peter Nurse
The u.s. dollar continued to climb on Thursday, as investors sought a safe haven in a context of strong volatility in financial markets and concerns over tightening liquidity.
At 10: 15 am, EUR/USD was trading at 1,0857, down 0.5%. The us dollar index, which tracks the greenback against a basket of six other currencies, was $ 101,930, up 0.4%, and close to its highest level since the end of 2016. USD/JPY rose 0.8% to 108,92, while GBP/USD is trading at 1,1584, down 0.25%, and just below levels not seen since 1985.
The australian dollar has reached its lowest level in 17 years, the new zealand dollar fell to its lowest level in 11 years, while the Norwegian krone fell more than 5% because of the collapse in oil prices.
The decision of the European Central Bank to launch an asset purchase program of € 750 billion (815 billion) in response to the epidemic of coronavirus has helped the single currency, but even that was eventually outdated by the evolution of the dollar.
“The main thing we will see in the days to come,” said John Hardy, head of the exchange-rate strategy of the Saxo Bank group, “in addition to a change of general sentiment, it is the us dollar, and the question of whether it is transformed back into a dollar killer that increases in general rather than just against the currencies most risky, all of which are victims of debt-general”.
The last meeting of the central bank of South Africa will be interesting later in the day on Thursday. It is expected that it would reduce its rates, given that the economy has sunk into a recession even before that the coronavirus may be intensifying.
Out of the 21 economists in a survey by Bloomberg, 11 provide for a reduction of 50 basis points, while others expect a decrease of 25 basis points.
The Swiss National Bank must also meet Thursday, but it should reverse the trend and avoid to lower its interest rates, which are already in negative territory, to combat the pandemic of sars coronavirus, according to a poll by Reuters.
At 10: 15, USD/CHF was trading at 0,9728, up 0.5%, while USD/ZAR stood at 17,38 increase of 1.8%.
