Buck slows rise, fears over virus starting to fade

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Buck slows rise, fears over virus starting to fade

FEBRUARY 12, 2020

The U.S. Dollar is trending in weaker ranges as petro-currencies and commodity-based currency peers are recovering from growing sentiment in markets that the worst of the coronavirus may have already been seen.

Overview

After world leaders complimented major hubs like Singapore for their measures against the spread and now, they are including China as signs point to a more stable situation than perhaps thought. Suspected infections in the mainland dropped and the main province compromised is reporting fewer outbreaks.  It seems as if the buck’s run as a safe-haven may be hitting the brakes.

China’s Premier Xi Jinping voiced optimism and believes that the country can re-surge from all this. The confidence is contagious with global assets all in the green. Meanwhile, Fed Chairman Jerome Powell’s testimony to the House revealed he does see the coronavirus as a dent to the world economy and the Fed must monitor it, decide to act if needed.

Other central bankers spoke on the other side of the pond without much impact, except for the Reserve Bank of New Zealand, which surprised with a decision not to ease the financial environment via rate cuts. The “Kiwi” rose by as much as 1.5% overnight as a result.

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

EUR

The Euro dipped into its worst levels in about three years after a combination of bad data and concerns over political friction. Industrial Production for them bloc overall fell by (-2.1%) in December and the change from last year represents a contraction of (-4.1%) far worse than the estimated (-2.1%).

We get the zone’s Employment Situation on Thursday. Hopes of recovery are slipping as the continent faces many challenges to the establishment and is severely affected by disruptions in Asian and global markets.

GBP

Unlike its counter Euro, Pound Sterling has a tendency to experience upward swings and is seeing one now based on high levels of confidence being exuded from the government. The belief is that Q4 was indeed a bottom for the U.K. and that a path towards fully leaving the EU will only create a bounce in business opportunities.

Negotiating their own trade agreements is the main factor for Brexit’s popularity, but the U.S. could dash hopes of Britain prioritized. Recent statements from U.S. officials point at a better path in negotiating terms with the EU than with the U.K. A bit of disagreement hit the relationship between the two countries recently with Britain supporting Huawei as a vendor for the 5G network construction. Just as it can go up a bit, Sterling has the potential to sink if the year is less smooth than forecast.

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