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Currency Market Analysis

Mar 20, 2020 | Currency Market Analysis

Global Themes

USD surge extended as investors, businesses look for safety

The US dollar continued to climb sharply higher overnight with investors and businesses looking to secure access to USD funding lines.

The big sell-off seen in historically safe have assets – like US government bond and gold – is seen as another sign that markets favour USD as the potential impact of the coronavirus outbreak continues.

The USDSGD was 0.7% higher and is now up almost 10% since the Lunar New Year.

The USD strength saw other currencies weaker with the EURSGD down 1.4% and JPYSGD down 1.7%.

Central bank action

Amongst the volatile trading, the Reserve Bank of Australia made a historic announcement as it cut official interest rates to an all-time low of 0.25%.

The RBA also announced an unprecedented quantitative easing program – also known as money printing – with the aim of pushing three-year bond yields down to 0.25% as well.

The focus remains on central banks with further policy support providing some support to pressured markets.

Over the weekend, a close focus remains likely on the growing numbers of coronavirus cases especially in the US and Italy. A further escalation could see safe haven currencies like the USD and JPY stronger.

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