The U.S. dollar and the Japanese Yen are still in high demand, even though it has been weeks after the coronavirus outbreak. China is almost still in quarantine; its economy is plummeting down. The virus death toll reached 1,016, though it’s more contained now, with fewer new cases.
However, this information does nothing to alleviate investors’ fears. They avoid currencies, which are dependent on China, turning to those who seem like safe-havens. Such risk-off tactics caused the dollar and yen to strengthen considerably.
The U.S. dollar reached its four-month high during the last days. The new data showed that the American economy fares much better than experts anticipated. It boosted the dollar’s price to new heights. Meanwhile, the yen also strengthened against Dollar, as the other much sought-after currency.
The dollar rose against the euro trading at $1.0910. Against a euro-heavy basket of currencies, it also stood high at 98.832. According to Imre Speizer, Westpac FX analyst, Dollar’s rally doesn’t come as a surprise as it has been helped out by a lot of things.
Speizer stated that the coronavirus striking has money going into the U.S. dollar, and a good run of economic data in the U.S. has been another support, leaving the commodity countries, like Australia and New Zealand, more vulnerable.
What about Australia’s and New Zealand’s currencies?
While the U.S. currency soars high, the Aussie and New Zealand dollar dropped down. They lowered more than 4% against the yen in 2020. The dollar traded at $0.6686 per Australian Dollar and $0.6378 per New Zealand dollar. Meanwhile, the Singapore dollar tumbled down by 3%.
The yen, on the other hand, rose steadily against the other Asian currencies, last standing at 109.75 yen per dollar. U.S. Treasury and Japanese government bond prices have also steadily increased this year due to the massive sell-off.
China’s central bank attempted to stop China’s economy’s downfall by injecting the 1.2 trillion Yuan of liquidity. Richard Grace, the chief currency strategist at Commonwealth Bank, noted that as China’s economy accounts for some 17% of world GDP, it’s collapse will have a severe impact on the global economy.