Daily Currency Update

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The coronavirus sends the U.S. dollar to a 45-day low versus the Euro.

USD - United States Dollar

The Coronavirus continues to transform into a global concern, triggering a sharp global equity market correction. The S&P 500 had its worst weekly performance over the last week, falling more than 12 percent. Over the last few hours, there have been rumours around a potential coordinated intervention by central banks. A few minutes ago, the EUR/USD pair touched a 45 day-high, trading at 1.1164. At the time of this writing, it is trading at 1.1139, representing an increase of 1.01 percent.

President Donald Trump attacked the Fed again for not executing measures to boost a likely economic slowdown triggered by the Coronavirus. Trump said, “…our Fed should start being a leader...We should have the lowest interest rates… and now we have this problem... you look at Germany, you look at Japan, you look at other countries, many of them have negative rates and we are not put in that position because of our Fed … and now we have this problem,” (referring to the Coronavirus). However, the Fed released a statement saying they are ready to, “...use their tools and act as appropriate”, last Friday.

Markets are panicking over the fast spread of the Coronavirus; however, World Health Organization Director Tedros Adhanom Ghebreyesus said, “Global markets … should calm down and try to see the reality.” He also added, “…based on the facts on the ground, containment is possible … But the window of opportunity for containing it is narrowing. So, we need to preparing side by side for a pandemic.”

As expected, Joe Biden won in South Carolina due to his long-standing ties to the black community. This is Biden’s first victory, giving his campaign good momentum as the best moderate alternative to Vermont Senator Bernie Sanders. The next primary races are on Super Tuesday on March 3rd. Billionaire Michael Bloomberg will also be on the ballot for the first time.

Key Movers

The Loonie rebounds this morning after it closed at 1.3407 last Friday, which was around the nine-month high reached in June 2019. On Friday, it reached an intraday high of 1.3465, which was the highest level since June 3, 2019. This morning, the USD/CAD pair is trading at 1.3380, representing a 0.2 percent decrease. The Canadian dollar is stronger amid a recuperation of oil prices and a weaker U.S. dollar, as coronavirus worries are prompting speculation that central banks, including the Fed and Bank of Canada, will ease rates as early as this week.

According to the Chinese statistics agency, China’s manufacturing fell in February by a wider margin than expected, to 35.7 from January’s 50 on a 100-point scale (numbers below 50 indicate contraction). This is a result of the efforts underway to contain the coronavirus, where China has shut down much of its economy.

The Japanese Yen, Euro, and Swiss Franc have emerged as the currency world’s winners, rising 3.33, 1.65, and 1.36 percent respectively versus the U.S. dollar over the last week (the Euro had its strongest advance since 2017.) This happened in one of the most negative weeks in decades, where global equity markets plunged and expectations for US rate cuts increased amid the ongoing news about the Coronavirus.

Expected Ranges

USD/CAD: 1.3333 - 1.3403 ▼

EUR/USD: 1.1017 - 1.1157 ▲

GBP/USD: 1.2726 - 1.2857 ▼

AUD/USD: 0.6434 - 0.6592 ▲

NZD/USD: 0.6180 - 0.6334 ▲