Dollar Weakens On Fed Rate Cut Hopes Amid Coronavirus Concerns
25 Febbraio 2020 - 8:41AM
RTTF2
The U.S. dollar lost ground against its most major counterparts
in the European session on Tuesday, as hopes for a Fed rate cut
increased on fears that the coronavirus outbreak would dampen
economic growth.
The dollar, viewed as a safe-haven asset, initially rose on a
jump in new coronavirus infections in China and worldwide.
Former Minneapolis Fed President Naryana Kocherlakota called for
a rate cut as early as May, according to a Bloomberg Opinion
piece.
"I don't think that the FOMC should wait that long to deal with
this clear and pressing danger," Kocherlakota wrote. "I would urge
an immediate cut of at least 25 basis points and arguably 50 basis
points."
Market participants are pricing in a 25 basis-point cut at the
Fed's policy-setting meeting in June.
The greenback dropped to 0.9768 against the franc, from a high
of 0.9805 seen at 8:00 pm ET. The greenback is seen finding support
around the 0.96 region.
The greenback was marginally down against the yen at 110.55. The
pair had finished Monday's deals at 110.69. Further drop in the
greenback may see support around the 108.00 level.
Final data from the Cabinet Office showed that Japan's leading
index rose in December as initially estimated.
The leading index, which measures the future economic activity,
rose to 91.6 in December from 90.8 in November. This was in line
with initial estimate.
The greenback depreciated to a 6-day low of 1.2995 against the
pound from yesterday's closing value of 1.2926. If the greenback
extends decline, 1.31 is possibly seen as its next support
level.
The latest quarterly Distributive Trends Survey from the
Confederation of British Industry showed that British retailers
plan to raise their investment in the year ahead for the first time
in two years.
The balance for investment intentions rose to +26 percent from
-38 percent in November, which was the biggest swing since the
survey began in 1983.
In contrast, the greenback climbed against the commodity-linked
currencies, as improving risk sentiment buoyed the latter.
The U.S. currency gained to 1.3306 against the loonie, 0.6593
against the aussie and 0.6319 against the kiwi, from its early low
of 1.3278, 4-day low of 0.6623 and a 5-day low of 0.6358,
respectively. The next possible resistance for the greenback is
seen around 1.34 against the loonie, 0.63 against the aussie and
0.62 against the kiwi.
The greenback also appreciated against the euro with the pair
trading at 1.0833. At Monday's close, the pair was worth 1.0853. On
the upside, 1.06 is possibly seen as the next resistance for the
greenback.
Data from Destatis showed that the German economy stagnated in
the fourth quarter, in line with the initial estimate, as the
positive contribution to growth from investment was nullified by
foreign trade.
Gross domestic product remained flat sequentially after
expanding 0.2 percent in the previous quarter. The statistical
office confirmed the flash estimate released on February 14.
Looking ahead, U.S. consumer confidence index for February,
S&P/Case-Shiller home price index and FHFA house price index
for December are due out in the New York session.
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