The euro and other major currencies rallied against the dollar after U.S. authorities confirmed the first case of the coronavirus with a citizen who hadn’t the exposure to the infection. Furthermore, there were more cases reported, undermining the perceived strength of the U.S. economy. As a result, the greenback sharply declined.
Federal Reserve Chair Jerome Powell declared on Friday that the central bank would act as appropriate to support the economy in the face of risks posed by the epidemic. Powell’s announcement came after Washington state had reported the second death from the virus. New York also stated about its first case of the illness, causing more fear and turmoil.
While the dollar lowered, the Euro and Japanese Yen strengthened on Monday due to their safe-haven status. The Yen last stood at 108.15 versus the dollar, after hitting high at 107.00 in early Monday trade. The Japanese currency had jumped by 3.2% last week. It’s the biggest gain since July 2016.
Traders boosted their bets of an interest rate cut by the U.S. Federal Reserve this month. It seems, they took Powell’s comments as a hint that the Federal Reserve will cut interest rates by 0.25% at least at its next scheduled meeting on March 17-18.
However, BOJ Governor Haruhiko Kuroda stated that the central bank would take necessary steps to stabilize financial markets. It could cause the Yen to fall after recent highs.
What about the Chinese Yuan and Aussie?
The offshore yuan steadied at 6.9663 yuan per dollar, while the Australian dollar bounced back to $0.6538, increasing by 0.5%. The sterling, on the other hand, stood at $1.2828, not far from its 4-1/2-month low of $1.2726 hit on Friday.
Meanwhile, the euro hit its one-month high of $1.1074. It last traded at $1.1050, up 0.3% so far in Asia, after rising by 1.7% last week. The Swiss franc also jumped to a 1-1/2-year high of 0.9610 francs per U.S. dollar on Friday, last stopping at 0.9642.