The euro, Aussie, and Kiwi slid early Friday, March 5, along with stocks, as investor sentiment turned sour once more. This latest development in the foreign exchange realm comes as the US dollar held firmly in almost three-month highs today, following its overnight surge.
We want to share this significant development in the foreign exchange business. It demonstrates how the current uncertain investment climate caused by the COVID-19 pandemic is impacting the currency markets.
According to the report posted online by multinational media firm Reuters, souring investor sentiments have impacted the riskier currencies severely. After a 0.7-percent overnight slump, the euro slipped 0.1 percent to $1.19635, indicating a one-month low.
Meanwhile, the New Zealand dollar or “kiwi” plummeted 0.2 percent. This figure added to its 0.8-percent overnight slide. As for the Australian dollar, it lost grip of its strength at 0.3 percent to $0.7705. This weakness of the Aussie extended yesterday’s 0.7-percent drop.
As economies worldwide reopen following the coronavirus or COVID-19 pandemic, many market analysts have experienced the pangs caused by the souring mood in the financial markets. They anticipate commodity-linked currencies to ascend.
National Australia Bank’s Ray Attrill wrote a client note. He remarked that it was quite an evening of market volatility, with the bond market being the center of attention. The Sydney-based forex strategy chief pointed out that the market appeared seeking for US Federal Reserve Chair Jerome Powell to push back harder on the latest yields increase.
While risk currencies carry on sliding, the US dollar has remained ascendant. Early in the Asian trading session, the dollar index changed a little at 91.660. This figure comes after raking in 0.7 percent overnight. Additionally, the US currency eased slightly to 107.835 yen. Nevertheless, it stayed close to the multi-month high at the cusp of 108 touched during yesterday’s 0.9-percent climb.
The US dollar rose the most in a month following Powell’s statement. He relayed that last week’s violent sell-off in Treasuries caught his attention and was a notable event. The US Federal Reserve System head relayed that such event was not a disorderly one, though. Powell also mentioned that such happening in the Treasuries is not likely to push long-term rates very high that his office might need to intervene more forcefully.
We respect Mr. Powell’s dovish stance. We gathered that he had emphasized a commitment to keep the ultra-easy monetary policy until the US economy is already very far along the road to economic recovery. Mr. Powell is speaking for his country, the United States, and developments there heavily impact the other territories’ markets and currencies.
We want to inform the governments whose official currencies are the euro, Aussie, and Kiwi to stay guided and updated with the latest events in the international financial markets. The current times are, indeed, uncertain.
Thus, we cannot blame the market analysts and investors for feeling jittery. However, like most pandemics, we believe that there is an end to the COVID-19 crisis. Above all, we believe that economies can rebuild in time via the synergy of the governments, citizens, and private sector.