U.S. Dollar soared, What caused the sudden turnaround?

U.S. Dollar soared. What caused the sudden turnaround?

The U.S. dollar is rising again after the short fallout during the last days. The downfall followed the release of the new data about the slowest annual growth during the previous three years. But it seems key U.S. manufacturing survey managed to recover unexpectedly.

Meanwhile, the Chinese yuan and Australian dollar remained subdued due to the coronavirus outbreak. So, the dollar got the green light and soared high again.

The Institute for Supply Management released a new report. It stated that after contracting for five straight months amid a surge in new orders, the U.S. factory activity rebounded in January.

After the release of this data, the dollar index increased by 0.44% on Monday, stopping at last at 97.802. So far, this is the biggest gain this year.

The dollar traded at 108.62 against the yen, after it gained 0.3% on Monday. However, the euro fell by 0.3%, stopping at $1.1062 at last.

Sterling also dropped at 1.54%, trading at $1.2999 on Monday. Such lowering was caused by concerns about Britain’s relationship with the European Union.

Prime Minister Boris Johnson laid out demanding terms for Brexit negotiations. So, some experts and investors fear that Britain may not have a trade deal after it reaches an 11-month transition period.

How did the Asian stocks fare?

The offshore yuan rose slightly over its one-month low of 7.0230 per dollar, trading at 7.0127 yuan per dollar. On the other hand, the Australian dollar fetched $0.6690, ahead of an interest rate decision of Reserve Bank of Australia.

Investors continue to sell-off and move to the safe-haven assets due to the virus. Ayako Sera, the market economist at Sumitomo Mitsui Trust Bank, noted that the question is how long it will take to contain the epidemic.

According to Sera, along with sellers, there are lots of people who are looking for a chance for bargain-hunting. However, if the virus isn’t dealt with soon, the results could be dire.

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