Dollar Loses Steam as Virus Fears Grow

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Dollar loses steamThe US Dollar couldn't hold onto the positive momentum as FX traders fear that the US Federal Reserve Bank will need to lower interest rates in an effort to counterbalance the impact of the Coronavirus spread. Money markets are pricing in at least three rate cuts by this time next year, with the first likely by April with a cut of 25 basis points. Similarly, markets believe that the European Central Bank will likely need to lower rates further, with a possible 10 basis points reduction later this year. What will drive the timing, analysts say, is the impact that the virus is having on trade and investor confidence outside of the Coronavirus focal point, China.

As of 11:05 am, the EUR/USD was trading at $1.094, a gain of 0.529%; the pair is moving off the session peak of $1.09484 while the low was at $1.08755. The USD/JPY was trading lower at 110.0240 Yen, a loss of 0.35%; the pair has ranged from 109.845 Yen to 110.462 Yen. Against the Pound Sterling, the greenback was trading at $1.2876, down 0.0235%; the GBP/USD pair recorded a session low of $1.28671 while the high was at $1.29474.

Virus Impact on US Unclear

The impact of the virus on the US economy still remains to be seen. Analysts say what is most worrying, however, is the government's apparent laissez faire attitude regarding it. Many analysts believe that Washington is grossly underestimating its impact on the economy and on the health of its citizens. Reports of new infections have slowed in China but picked up the pace elsewhere in the world. Moreover, the appointment of Vice President Pence as “Coronavirus Czar” to spearhead the campaign in the US was not well received by financial markets.

After working on Wall Street, Barb began her second career as a freelance writer at Daily Forex, where the CEO recognized fresh, untapped potential and was willing to give her a try. She’s never looked back. Since then, she’s worked steadily as a freelance writer and editor in the financial services and Forex-related industry.