Fundamental Comment

Dollar drops as Trump corona remarks fail to calm markets

Dollar drops as Trump corona remarks fail to calm markets

The U.S. dollar fell against a basket of major currencies on Thursday as President Trump’s comments on the coronavirus failed to calm markets and as he criticized the Federal Reserve.

As of 07:40 GMT, the U.S dollar index, which measures the performance of six major currencies against the greenback, slumped by 0.08 percent at 98.58, hitting the lowest level since February 12 at 98.59.

The greenback lost the haven battle today, as it dipped against both the Japanese yen and the Swiss franc, while gold managed to rise for a second straight session.

The six-currency index has resumed its fall since hitting a top of 99.80 last week, the highest since April 2017, as it has become extremely overbought.

While the U.S. President Donald Trump indicated that the situation is good within the United States, his remarks failed to ease the tensions in financial markets.

The center of control U.S. disease and prevention does a great job in dealing with the coronavirus, Trump tweeted on Wednesday.

The president's comments come as U.S. health officials issued warnings yesterday to prepare for the spread of the virus in the country, following the discovery of a soldier's infection at camp Carroll near South Korea.

The number of corona deaths in China has declined in recent days, with 71 deaths reported yesterday, the lowest daily death rate in more than two weeks, and more than 78,000 cases.

However, the deadly virus is spreading rapidly outside China, with the number of cases infected rising to 1,146 in South Korea and 11 deaths so far.

Iran also saw the death toll rising to 15, with 95 cases infected, while Italy was no better, with 10 deaths with more than 320 infected.

The World Health Organization (WHO) reported that the number of infections outside China exceeded that of the first time since the outbreak of the virus.

“We’ve been hurt, in my opinion, very badly by our own Federal Reserve who has also created a very strong dollar,” Trump said criticizing the Fed on Wednesday.

Later in the day, investors will focus on the durable goods orders data and preliminary GDP, as markets are currently pricing an interest rate cut by the Fed in March or April to counter the negative impact of the coronavirus.

Durable goods orders may have tumbled 1.5 percent in January, while the world’s largest economy probably expanded an annualized 2.1 percent in the fourth quarter, according to median forecasts. 

Share Article