The dollar recovered from earlier losses and headed near to a three-year high during London trade on Monday as a selloff in equities worldwide continued to ripple. That self-off helped to raise the greenback's safe-haven appeal; the greenback has experienced a major rebound against most of its major rivals, rising about 9% over the past fortnight. Analysts are concerned that the demand for the greenback will be insatiable, despite efforts by the central banks to increase market liquidity. There is a fear that the central banks' efforts will simply be inadequate, which itself increases the market's desire to hold the US Dollar.
As of 10:04 am in London trading, the EUR/USD was trading at $1.0677, down 0.1674%; the pair has ranged from a session trough of $1.06353 to a high of $1.07699. The GBP/USD was lower at $1.1567, a loss of 0.7124% and off the session low of $1.15269. Against high-risk currencies, the Dollar stood tall; the AUD/USD was $0.5748, down 0.8624% and of the earlier peak of $0.58296 while the NZD/USD was lower at $0.5644, down 1.116%.
Upcoming PMIs Likely to be Dismal
While the Coronavirus is dominating the news cycle and is foremost in the minds of most market players, FX traders will be watching for the release of PMI reports due out tomorrow which could result in a knee-jerk reaction. With manufacturing and services sectors worldwide grinding to a halt in the wake of the pandemic, it is clear that the economists and analysts surveyed have little hope of these outcomes. All of the major PMI releases for March, albeit preliminary, are expected to have taken a hard turn south into economic contractions. The Markit Manufacturing PMI for Germany is expected to come in with a reading of 40, while the EU area PMI is likely to follow with a reading of 39. In the UK, the Markit Services PMI is predicted to come in at 45. PMI readings for the US are likely to similarly be in the low 40s for both the manufacturing and services sectors, as well as the composite.