Forex Sector Begins to Settle Following Coronavirus Epidemic
Although the fears surrounding the coronavirus from a health point of view, there has also been a detrimental effect in relation to foreign exchange and shares. The news of the outbreak caused a market sell-off which removed $6 trillion of the market value.
Stocks plunged after there was a lot of fear surrounding the effects the spread of the virus could have on the economy. It has been reported that Wall Street has seen its worst week since October 2008, which was during the financial crisis.
The reason for the sell-off was due to concern that the coronavirus had the potential to halt economic growth and company profits.
Asian trading was also affected as many investors were keen to safeguard themselves following an outbreak in South Korea. The lack of trading has meant that USD/JPY currently pairing has experienced a three-week week low scoring below 109.00.
USD was affected further following confident expectations by the Federal Reserve that there will still be an active economy.
New Zealand Dollar Also Affected by Coronavirus
Despite some of the drops seen in other currencies, it was the NZD that reached the cheapest levels following New Zealand confirming its first case of the coronavirus.
The AUD/USD current pairing was also affected, being recorded at 0.6230, the lowest seen in 11 years.
USD/CAD Pairing Shows Surprising Results
Despite some of the detrimental effects on the economy, the USD/CAD pairing still enjoyed a high at 0.6519 following a dip in oil prices, which are currently at a 13-month low despite Saudi Arabia planning to push for a 1m BPD oil output cut.
Markets Start to Recover
Although the fears surrounding the coronavirus lead to a massive sell-out, there are signs that show the market is trying to recover. As well as the Federal Reserve announcing that there could be a reduction in rates, a similar approach is being taken by the Bank of Japan, which has seen some currency pairing rise in value.
The GBP continues to be a currency with some uncertainty. As well as suffering through recent Brexit negotiations, the currency also must bear the weight of some recent coronavirus news/
Despite there being active attempts made to contain the virus, there seems to be a lot of uncertainty when it comes to trading and commerce.
Although the coronavirus has overshadowed the Brexit negotiations, the discussion between the UK ad EU has still been blighted by low expectations, especially in relation to trade. There is even speculation that current discussions could fall apart in weeks, meaning that GBP could be left in the cold until some final decision has been made as to how the UK will move forward as a separate entity.