Dollar keep strong on Friday, supported by safe-haven demand
Investors are scrambling to buy US dollars as panic about the new coronavirus epidemic has intensified. Faced with the big collapse of the financial market, investors are lost and were only eager to sell risky assets.
ZFX analyst Jacob Leung said that the market is busy for “cash out”, which imply a shortage of dollars.
The Federal Reserve finally take action to inject $1.5 trillion in short-term funds into the market on Thursday.
However, those measures may be only effective in the next few days. Investors still expect that the Fed will have to take further action to restore financial market order and stability.
Even though the European Central Bank did not cut interest rates by 10 basis points, it did not have much support for the euro, and even some investors were disappointed that they were bearish on the economic outlook of the euro zone. It would be a negative factor to euro. The Dollar index hit the high at 98.31 last night.
On the other hand, the market has expected the Federal Reserve to cut interest rates by at least another 75 basis points next week. Even so, the dollar was higher against most major currencies.
Traders are currently mainly concerned about the stock market crash, because with the rapid spread of the virus globally, the global recession is very likely. Generally, when the market is turbulent, disappointed and disturbed, it needs US dollar.