Forex – Dollar in Demand, Euro, Pound Under Pressure
The U.S. dollar remains strong Tuesday, as heightened concerns about the spread of the deadly coronavirus in China prompt demand for currencies as safer.
At 08:00 ET (0800 GMT), the USD/JPY traded 0.2% higher at 109.08, having fallen as low at 108.83 overnight. The US Dollar Index Futures, which tracks the greenback against a basket of other currencies, pushed up 0.1% to 97.81, approaching the levels last seen in early December. That follows broad gains against commodity currencies in recent days as the market has priced in the risk of a drop in Chinese demand for basic materials.
The positive tone around the dollar, in combination with global growth concerns amidst the spread of the Chinese virus, have kept EUR/USD under heavy pressure of late.
“The pair remains under pressure although off Monday’s year-to-date lows near the psychological 1.10 mark,” “Dynamics around the buck are expected to remain the exclusive driver of the pair’s price action for the time being along with alternating risk appetite trends in response to developments from the Wuhan coronavirus.”
With this in mind, attention is likely to be turned to the start of the Federal Reserve’s two day rate-setting meeting Tuesday, as well as the latest data releases in the U.S..
Durable goods orders are due at 8:30 AM ET (1330 GMT), and are expected to have risen 0.3% last month, while at 10:00 AM ET, the January consumer confidence index is expected to come in at 128 from 126.5 in December.
Sterling was also weaker early Tuesday in Europe, amid concerns that the country will not be able to reach a trade deal with the EU by the end of the post-Brexit transition period at the end of the year. GBP/USD and GBP/EUR were both around 0.2% lower.