US Dollar Weakens as Markets Worry of Coronavirus Impact on American Economy
After several days of bullishness the US dollar has weakened on Wednesday over worries of the potential impact of the coronavirus outbreak on the US economy as more cases get reported across several countries worldwide. At the time of writing, the US dollar index is trading around 99.11.
So far, the dollar has lost around 0.9% of its value from the recent highs touched last week, but has posted a slight recovery to return above the 99 level. The greenback is losing some of its sheen as a safe haven currency over prevailing concerns that the coronavirus could turn into a global pandemic and affect economies all around the world, beyond merely China or Asia.
There also rising expectations for a Fed rate cut in the face of potential economic weakness being driven as a fallout effect of the outbreak. Worries were heightened on Tuesday after a senior CDC official cautioned American citizens to start preparing for a possible outbreak of the coronavirus in the US.
Analysts expect the risk-off sentiment to dominate in markets for at least another month until further clarity emerges on the extent of the virus’s impact. In case China and other affected countries are able to successfully contain the spread of the virus by then, the mood in the markets could improve.
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