Fundamental Comment

Covid-19 jitters trigger scramble for refuge assets

Covid-19 jitters trigger scramble for refuge assets

Financial markets' participants continued to charge for safe havens on Friday, amidst the rapid rise in corona infections outside China, corporate profit warnings, events cancelation and pledged actions by governments.

Fears continued to dominate investors' vibes as the sharp increase in covid-19 cases, especially in Europe and North America, which raised expectations that the global epidemic is out of control.

So far, the coronavirus has infected more than 95,000 people worldwide, whilst at least 3,200 deaths were reported, according to the latest data from the World Health Organization.

Investors have left risky assets while thought safety in classic refuges such as bonds, gold, Japanese yen and Swiss franc.

The U.S. dollar has lost its merit as a safe haven currency, especially after the latest surprising interest rate cut by the Federal Reserve and due to rising odds of further rate reductions in the coming period.

The green currency tumbled against the yen to a low of 105.66, the lowest since late August 2018, while hit a bottom of 0.9403 versus the franc, a level not touched since March 2018.

Gold resumed its soar for a second straight session to $1680 an ounce, set for its largest weekly advance since October 2011.

The yield on the U.S. 10-year Treasury dropped more than 16 percent to record a new all-time low at 0.769 percent, where some analysts are expecting more fall in bond yield to negative territories.

Later in the day, eyes will focus on the U.S. jobs report, which may signal a job creation pace of 175,000 in February and stabilization in the unemployment rate at 3.6 percent.

A lower than forecast reading in the NFP will trigger more speculations of seeing further interest rate cuts to contain the economic damages of the deadly virus.

The dollar index plunged to a low of 96.20, resuming its steep decline from a top of 99.80 registered on February 20 and on track of completing a 100 percent Fibonacci Retracement from the mentioned peak.

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