Yen, Dollar and Swiss Franc in demand due to virus anxiety

The U.S. dollar is the best performing currency among the G10 currencies this month. Its index rose 1.6% in January, hitting a two-month high. It last stood at 98.033, not far from Wednesday’s two-month high of 98.037.

The Japanese yen and the Swiss franc also ranked a close second and third. The yen increased by 0.14% the previous day, trading at 109.06 yen per dollar. The Japanese currency fell 0.3% against the dollar this month, but it still manages to gain. The Swiss franc cost was at 0.9729 francs per dollar.

Such demand on these three currencies is due to China’s virus outbreak. During the last weeks, the market constantly fluctuated, depending on the virus’s progress. The Chinese yuan and Australian dollar suffered the most, though U.S. futures fell for some time when the virus reached America. But as the main epicenter is China, traders began to move on safe-haven stocks, such as Japanese and U.S. futures.

Minori Uchida, the chief currency analyst at MUFG Bank, stated that the overall market is neither clear-cut risk-on nor risk-off. However, in the currency market, the dollar, the yen, and the Swiss franc are favored now. According to him, downgrades to the Chinese economy looks inevitable, even though it is highly uncertain how much the disease will spread and how hard it will hit the economy.

China’s Economic Growth Lowers. The Other Countries That Depend On China May Suffer Also.

Those other economies that rely heavily on Chinese demand could also suffer a severe blow. The Australian dollar had already hit a 3-1/2-month low of $0.67355 in the previous session, trading at $0.6751. However, the offshore yuan steadied recently, trading at 6.9730 yuan per dollar. The euro touched a two-month low of $1.0992 in U.S. trade on Wednesday, standing at $1.1009. on the other hand, sterling traded unchanged at $1.3016.