Dollar slides, loses safe haven status

26.02.2020 - Evdokimov Roman
Dollar slides, loses safe haven status

The dollar slipped on Wednesday as investors question its relative strength, together with other US financial assets, as central bank imposed rate cuts and health officials warned of a potential domestic virus outbreak.

The dollar’s index declined to 98.980 against a basket of major currencies. It lost 0.9% since its peak at 99.915 the previous week.

The U.S. dollar traded at 110.25 against the Japanese yen. The euro climbed $1.08815, showing recovery after dropping to an almost three-year low of $1.0778 on Thursday.

The dollar rose last week when market appetite favored the US currency, perceived to be less likely hit by the virus outbreaks.

After becoming a safe harbor for weeks, the U.S. dollar is crumbling.

A major official of the U.S. Centers for Disease Control and Prevention called on Americans to begin preparation for the domestic spread of the virus. Another official said that the question of whether the virus would spread globally was long past, and it had already become a question of when.

When the pandemic spread fast to Europe and the Middle East, investors no longer perceived the U.S. economy to be resilient. Most investors believe that the U.S. Federal Reserve will cut interest rates to underpin the economy.

The 10-year Treasuries yield dropped to an almost 1.30% record low.

The Australian dollar traded at 0.6603 against the U.S. dollar.

Other central banks around the world, like the European Central Bank and the Bank of Japan, have limited its implementation of measures after reaching record lows of policy rates.

 

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