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Dollar firms up against the yen

Chris Lee

The US dollar managed to surge against its rivals on Tuesday and into Wednesday as the Chinese coronavirus continued to lead the headlines.

The greenback stood tall against its rival, the safe haven Japanese yen, after investors began to see signs of the Chinese government moving to support the country’s economy.

The Chinese government has added a significant amount of cash to the country’s economy as part of measures to control worries over the impact the spread of the virus might be having on investors.

It has also implemented a number of quarantine-related measures designed to limit the spread.

This has in turn led the World Health Organisation to suggest that the virus’ spread could be controlled.

While there has been one confirmed death outside of China, in Hong Kong, the WHO’s advice appears to have reassured the markets.

For forex traders, the main consequence of this was that the safe haven currencies were now less valuable.

The Japanese yen saw its lowest point for a week and a half in its pair against the greenback and was seen at 109.43 per dollar at one stage.

However, it did manage to make some gains after it hit this low point – indicating that the markets are not yet out of the woods in relation to the coronavirus.

Elsewhere, the Chinese yuan appeared to be in a good place despite the virus.

It rose a little overnight and then remained firm at 6.9943.

This came despite concerns that quarantine measures are having a distinctive economic impact.

Some economists have changed their predictions about China’s projected growth, with suggestions that the quarantine is causing people to fail to go to work or shop in stores.

One prediction even suggests that there could be a growth drop of 0.6% over the course of the year.

Some firms, such as Cathay Pacific Airways in Hong Kong, are saying that around 30% of its capacity could be slashed in the coming months due to the virus .

The Antipodean currencies, which are deeply interlinked with China due to Australia’s exporting relationship with the major Asian economy, also did well.

The New Zealand dollar mainly just held firm, although the Australian dollar surged.

It was up by 0.7% in its pair with the US dollar, which was a significant development.

It was seen at $0.6733, which was its best performance across the entire week – and a far cry from its previous performance, which was one of its worst for a decade.

The British pound, which has been in the doldrums recently due to Brexit and uncertainty about the UK’s future trading relationship with the EU, managed to come back from its worst performance in a month and a half.

This was fuelled largely by positive data on construction activity.

The single European currency, which had also had a bad few days, managed to hold firm in its pair with the greenback.

It was spotted at $1.1042 at one stage.

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Chris Lee
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