The US Dollar regained favor among FX traders, largely as a safe-haven currency, as lock downs and quarantines across the globe heightened worries of uncertainty in the long term. The US President yesterday extended his social distancing guidelines through to the end of April; the guidelines were due to expire prior to Easter. In India, the Prime Minister there ordered a 21-day lock down of all citizens; that news caused panic among the migrant workers who rushed instead to get to their local villages. In the UK, concerns of a rising death toll could prompt the government to strengthen their efforts to minimize outbreaks. The credit ratings agency Fitch downgraded UK debt to AA- given the uncertainty of the Coronavirus efforts.
As of 10:55 am in London, the USD/EUR was trading at $1.1069, a loss of 0.6391%; the pair has ranged from $1.10598 to $1.11472 in today's session. The GBP/USD was also lower at $1.2386, down 0.5108% and off the session trough of $1.23162 while the high was recorded at $1.24702. The USD/JPY was 0.04% lower at 107.8400 Yen, off the session peak of 108.252 Yen.
Will Central Bank Efforts Work?
Currency strategists say that the US central bank's move to provide unlimited liquidity in light of the economic threats of the Coronavirus had helped the greenback regain market interest. However, they point out that Federal Reserve's move to satisfy the rising demand for hard cash has only helped to alleviate current funding stresses, not eliminated it entirely. With many of the major central banks opening up their respective tool boxes to unleash liquidity, the concern is that they will eventually all reach their capacity limits.