The U.S. dollar edged up on Wednesday after declining on Tuesday. Investors returned to safe-haven currencies, causing the greenback to rally against most majors after suffering its worst fall against a basket of currencies in almost two weeks.
At first, safe-haven gains were slight, but they increased in morning trade as the two-day rally in Asia’s equity markets slowed down, and gold and bonds remained firm.
The U.S. currency soared the most against the risk-sensitive Australian and New Zealand dollars. It rose by 0.5% versus each one, trading at $0.6142 per Aussie and $0.5951 per kiwi.
Ray Attrill, the head of FX strategy at National Australia Bank in Sydney, noted that risk-aversion and the U.S. dollar go hand in hand.
The greenback climbed up by 0.1% to 7.0730 yuan in offshore trade in Asia. This is a rise from a three-week low against the Chinese yuan. Furthermore, it increased by 0.5% against the Korean won.
Investors are keenly observing as lockdowns lift in Wuhan, China. Authorities are trying to allow greater freedom of movement while simultaneously preventing a second wave of infection, which isn’t an easy task. Particularly when there are people who show no symptoms but can still pass on the virus.
Did the Japanese Yen gain also?
The Yen increased slightly against the British pound to $1.2321 and the euro to $1.0878 due to its safe-haven status. It even rose against the U.S. dollar by 0.1%. The greenback traded lower to 108.55 yen by the end.
The Japanese currency fell recently due to the traders’ concerns about the virus’s rapid spread in Japan. However, after the authorities issued a new policy to slow down the infection, the Yen rose again.
Joe Capurso, the currency analyst of Commonwealth Bank of Australia, stated that even though the virus’ curve is flattening, the economic effects of the corona crisis will linger for years. He thinks that some businesses will not re-open, and unemployment will take years to recover. However, analysts predict further gains for the dollar and the Yen.