The US dollar has been at a two-month high compared to Asian currencies that have been declining, The US Federal Reserve has announced its intent on holding interest rates, but is wary about the uncertainty on global economic outlooks.
The US dollar has been declared as a safe-haven destination for investors. Last Thursday, a basket of major currencies including the Australian dollar and Chinese Yuan were under pressure as investors shifted their attention to the US dollar.
Among the G10 currencies in January of 2020, the US dollar was declared as the best-performing currency. Its index increased by 1.6 percent in the last month making it the second consecutive month of improvement. It rose from 98.026 to 98.033 in Wednesday.
According to Senior Manager of Research at Mitsui Sumitomo Trust Asset Management Naoya Oshikubo, the US Fed has been set at cutting interest rates when needed. It was also revealed that US money markets have been pricing in one rate cut by the third quarter of 2019.
The report claimed that the safe-haven currencies as of today are the Japanese yen and the Swiss franc which were next to the US dollar in terms of value ranking.
The Japanese yen was firm at 0.1 percent to 108.90 per dollar. The currency was said to have experienced it third-week high of 108.73 since last week. This month, however, it fell by 0.3 percent against the dollar but have been rising compared to other Asian currencies. It had since improved by 1.6 percent against the euro while the Australian dollar is at 3.9 percent.
The Swiss franc, on the other hand, is at 0.9729 per dollar this month. This week, it had been flat on the day and down by 0.5 percent in January 2020. It has been, however, at its 32-month high against the euro.
According to the chief currency analyst at MUFG Bank Minori Uchida, the China coronavirus epidemic has been spreading globally causing uncertainty in currency markets. The analyst added that it has downgraded the Chinese economy, a result that is inevitable during the epidemic.
A Chinese government economist also claimed that China's economic growth may drop by a whopping five percent or lower. The informant then hinted that this may cause local policymakers to impose more stimulus measures. The said imposition was forecasted to significantly and adversely affect other economies who rely heavily on Chinese demand.
