The Chinese virus outbreak caused the investors to move on to the risk-off futures. This is as a significant part of the Asian market began to collapse. China stocks suffered the most, as the virus originated from Wuhan, its 11-million city. Meanwhile, the Japanese yen and Swiss franc skyrocketed, as these stocks are perceived as safe-havens. But now the virus-induced panic is subsiding. So the stock market is slowly returning its previous state, with Yen and Swiss franc climbing down from their high.
Thierry Wizman, global interest rates and currencies strategist at Macquarie Group, noted that more reports show that the Chinese are clamping down. According to him, if there is anything driving things, it seems to be the fading of concerns around the coronavirus, which has killed 106 people so far.
President Xi Jinping also announced on Tuesday that China will defeat the “devil” coronavirus. Despite this statement, other governments organized evacuations. Hong Kong is going to suspend rail and ferry links with the mainland.
The Dollar Index Rides High, Continuing its Two-Month Rally
Global markets settled a little. The dollar index rose to 0.4% on the day at 97.995 on Tuesday. The Swissie has hit its highest record since April 2017, strengthening to 1.067 francs per euro. The Japanese yen dropped down to 0.22% at 109.13 per dollar, while the Swiss franc also lowered to 0.36% against the dollar, last at 0.973. On the other hand, offshore yuan increased 0.24% versus the dollar after its three-week lows.
Wizman stated that with much of Asia closed, foreigners might be feeling that the only way they can get exposure to the global stock market is through buying on the U.S. market. China and Hong Kong are closed. Maybe that’s what is strengthening the dollar. If that’s the reason, then that would reverse in time when the other markets open up again for trading – said the strategist.