Safe-Haven Currencies Gain. The U.S. Dollar Still Low

Dollar and other currencies

The safe-haven currencies, the Japanese yen, and the Swiss franc gained on Wednesday, while the U.S. dollar declined. The yen rose against the dollar by 0.6% to 104.98 yen, high almost a full yen. The Swiss franc also increased by 0.25% to 0.9369 francs per dollar. However, the euro was steady at $1.1304, climbing up by 0.21% so far in Asia.

The currencies fell sharply on Monday, along with the stocks after the pandemic fear spread. Even so, the investors thought that the authorities would take measures to stop economic downfall. That’s why the collapse was so short, and the markets rebounded on Tuesday.

However, the dollar declined again after the rebound, lowered against the Swiss franc and the Japanese yen. Furthermore, U.S. equity futures and U.S. bond yields fell in early trade in Asia on Wednesday, with most investors still on the sidelines even after risk assets’ recovery on Tuesday.

Liquidity is very thin presently – noted Yukio Ishizuki, the senior strategist at Daiwa Securities. He thinks that trade will remain volatile for the time being, as there are very few orders in the market, and most of them appear to come from algorithm players.

U.S. President Donald Trump Spoke about Recovery Plans

Trump stated that he would ask Congress for a payroll tax cut, as well as other “very major” stimulus moves, to help the markets recover after renewed pandemic fears. But the details remain unclear so far. The investors decided to employ risk-off tactics until there is more clarity on the subject.

Tuesday’s rebound in the U.S. currency and risk assets is a type of a rebound which often happens in a downtrend – noted Shinji Ishimaru, the senior currency analyst at MUFG Bank. According to him, it’s too early to say if the market sentiment has turned positive.

Analysts say that a lot depends on the U.S.’s ability to contain the infection, but this ability is still uncertain.

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