Now we have an international foreign exchange market in the limelight. As cases of coronavirus rise, investors seek safety. The Australian dollar is at its lowest since early December. The yuan hits a three-week low.
The yen erases most of its early gains but bounces.
More than half a percent to 2020, low China’s yuan tumbled. Meanwhile, commodity-liked currencies fell sharply. For example, we can say the Australian dollar fell sharply because of escalating fears about the spread of coronavirus. The virus from China sent investors into safer assets.
Frequently viewed as a haven, the yen was the primary beneficiary. Nevertheless, the move was contained. The yen briefly rose to its highest since January 8.
Around the world, health authorities are racing to stop a pandemic of the virus. It killed more than 80 people in China. Globally, nearly 2,800 people have the infection. On Sunday, China’s National Health Commission said that the ability of the coronavirus to spread was becoming stronger.
The Australian Dollar, and Lunar New Year
China’s cabin extends the Lunar New Year holidays to February 2. It is to strengthen the prevention and control of the new coronavirus. That information came from the CCTV on Monday. The holidays were supposed to end on January 30.
Hong-Kong has banned the entry for the visitors from China’s Hubei province. The coronavirus first outbreak came from the Hubei province.
Elsa Lignos is the RBC Capital Market’s global head of FX strategy. She said that some analysts argue that the fear will be worse than reality with the coronavirus. She is pointing to the low rate of mortality. No one is forecasting a Spanish flu to repeat. Elsa Lignos adds that the bigger worry is the economic impact of quarantine and containment strategies, particularly in China.
The offshore Chinese yuan per dollar shed 0.6% to 6.9783. It is the weakest since December 31.
The Australian dollar is heavily exposed to the Chinese economies’ performance.
That is the leading news of the market.