Virus panic sends yen to seven-week high against dollar - CNBC

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Virus panic sends yen to seven-week high against dollar - CNBC Posted: 27 Feb 2020 05:44 PM PST Japanese yen banknotes of various denominations are arranged for a photograph in Tokyo, Japan, on July 22, 2015. Kiyoshi Ota | Bloomberg | Getty Images The Japanese yen hit a seven-week high against the U.S. dollar and was on track for its largest daily gain since May 2017 as investors nervous about the spread of the coronavirus in the United States piled into the safe-haven currency. Hopes that the outbreak can be contained in China have been replaced this week by worries that infections are spreading around the globe. Measures to contain the virus have wreaked havoc on supply chains, the world's economy and financial markets. Equity markets have tumbled, with the S&P 500 on course for the worst performance in a week since the 2008 financial crisis, as investors dumped riskier assets and piled into safe-haven currencies. That sent the Japanese yen to a seven-week high of 107.77 versus the dollar, last trading up 1.22%. "The yen is significantly stronger from where it was even last week, when I was hearing people saying that the yen wasn't a safe-haven anymore. We're now back to appropriate levels," said Mark McCormick, global head of foreign exchange strategy at TD Securities. McCormick said one additional factor supporting the yen could be the fact that Japan's public pension funds have been rebalancing assets. "I think it's pretty clear that the (Japanese Government Pension Investment Fund) is trading ahead of the announcements of their weights, which if you think about what they've done over the past five years, they've created an allocation that leans much more towards global equities, global credit, global fixed income - which in this environment would see dollar-yen rally as they're pushing some of their flows outside of Japan." Traders were also offloading currencies closely associated with a possible recession, pushing the Australian dollar, much reliant on China and global economic growth, 1.07% lower to $0.650, its lowest in 11 years. Apart from jumping into safe-haven assets, money managers also tend to reverse out of so-called carry trades in tumultuous times. In carry trades, investors borrow in low-yielding currencies like the euro - where interest rates are below zero - to invest in higher-yielding ones. With investors pulling out of higher-yielding and riskier currencies, that has helped the euro soar to a 3-1/2-week high of $1.105. It was last roughly flat at $1.100. The U.S. dollar index was last down 0.093% to 98.349. Against the pound the dollar was down 0.79% to 1.278.

Forex - Dollar Regains Ground as Coronavirus Spreads Globally - Investing.com Posted: 24 Feb 2020 04:27 AM PST © Reuters. By Noreen Burke Investing.com - The dollar regained ground against a currency basket on Monday as a surge in new cases of coronavirus globally, most notably in Italy, renewed concerns over the economic impact of the outbreak. Authorities in Italy imposed a quarantine in the north of the country to try to halt what is the largest outbreak of the virus in Europe, with the number of cases jumping to above 150 on Sunday from just three before Friday. in South Korea the number of infections has surged to more than 700 with seven deaths and Iran has confirmed 43 cases and eight deaths. On Monday China reported only 11 new cases outside Hubei province, where the virus originated, indicating that the spread of the virus in the rest of the country has slowed. Chinese authorities have been urging business to resume work in order to spearhead a recovery in the world's second largest economy. "The omens are not particularly good today," said Ray Attrill, head of FX strategy at National Australia Bank in Sydney. "The presumption was that we would see intermediate supply chains quickly reconnected and I think the market's had to go through a period of questioning that logic." The Australian and New Zealand currencies remained on the back foot, with the hitting a fresh 11-year low overnight and the shedding half a percent. Heightened risk aversion, which also saw stocks tumble and gold and bonds rise, offered some support to the traditional safe haven yen, but concerns over Japan's virus exposure still weighed. The dollar was trading at 111.39 per by 3:56 AM ET (8:56GMT), down 0.2%. "The market reaction to the coronavirus appears to be evolving, beginning to differentiate the currencies vulnerable to the virus from the rest," Barclays analysts said in a note. "U.S. dollar assets provide relative attractiveness," they wrote. "In fact, our economists forecast no impact on U.S. growth from Covid-19, with relatively few domestic incidents and a low dependency on China's economy." Against a basket of currencies, the crept back toward an almost three-year peak touched last week, before soft economic data knocked it from its perch on Friday. It was higher against the at 1.0821 and the at 1.2919. --Reuters contributed to this report Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data. Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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