On Tuesday, the 25th of February 2020, the US dollar index (DXY) measured against a basket of six major currencies on an average fell by 0.29 per cent to 98.64, as the American currency appeared to have erased its safe-haven appeal following a US disease prevention authority warning on Tuesday (February 25th) that advised the US nationals to prepare for a mass-scale hit from the coronavirus outbreak, while rising possibilities that the latest outbreak of China’s Wuhan coronavirus which had already spread in to thirty countries across the globe could have led to a mass-scale pandemic added to investors’ bet of a Fed rate-cut this year, eventually weighing on the American dollar.
In point of fact, the US Dollar index rose to its multi-year peak last week as investors were contemplating the greenback as a safe-haven bid, nonetheless, the index was pulled off its multi-year highs this week after demands of other safe-haven assets were thought to be picking up over competing narratives of a rate-cut bet as early as in the first half of the year to ease pressures of an inflamed US economy, which would likely to witness further withering if the virus outbreak escalated further, suggested analysts.
Meanwhile, referring to a growing possibility of multiple Fed rate-cut this year to sustain a decade-long expansion of US economy, a senior market analyst at Western Union Business Solutions, Joe Manimbo said late on Tuesday (February 25th), “The potential for the economic fallout from the virus to wash up on U.S.
shores has cooled the dollar’s rally to three-year peaks by knocking Treasury yields to multi-year lows and raising expectations for the Federal Reserve to deliver more interest rate cuts to keep the record long expansion intact.
” Besides, amid such withering outlook on US economy stemmed from the financial fallouts of China’s coronavirus outbreak, the American currency shed as much as 0.61 per cent against its Japanese counterpart to 110.04 Yen per US dollar, while euro had clocked a gain of 0.27 per cent to wrap up Tuesday’s (February 25th) market at $1.0880.