Home > World > Dollar at 4 month highs against euro on virus concerns

Dollar at 4 month highs against euro on virus concerns

Written by Business World, on 10th Feb 2020. Posted in World

article headline

The dollar hit a four-month high against the euro on Monday as concerns about the coronavirus boosted demand for safe havens, while a bullish outlook for the U.S. economy and weak data in the eurozone made the greenback relatively more attractive than the single currency.

People across China trickled back to work on Monday after an extended Lunar New Year holiday as the government eased restrictions imposed to counter the coronavirus, but the World Health Organization said the number of cases outside China could be just "the tip of the iceberg."

Investors are concerned that the spreading virus will dent the global economic outlook. Relatively strong economic data in the United States is also making the greenback more attractive than other currencies.

Data on Friday showed that U.S. job growth accelerated in January. By contrast, German industrial output suffered its biggest fall in December since the recession-hit year of 2009, data on Friday showed. Data on Monday also revealed that Italian industrial output was much weaker than expected in December.

“We had much stronger than expected U.S. data, coupled with much weaker than expected eurozone data,” said Win Thin, global head of currency strategy at Brown Brothers Harriman in New York. At the same time, “we have the safe haven bid from the coronavirus. That is killing EM and really benefiting the dollar, and to a lesser extent the yen and Swiss,” Thin said.

Political uncertainty in Germany is an additional headwind for the euro. Annegret Kramp-Karrenbauer, leader of Chancellor Angela Merkel's Christian Democrats (CDU), on Monday confirmed she would not run for chancellor in next year's federal election but added that she would remain party chair until another candidate is found.

The euro fell to a four-month low of $1.0925. The British pound dropped to a two-month low of $1.2870 before rebounding to $1.2938. The Australian dollar sank to $0.6656, the lowest since 2009, before gaining back to $0.6682. Australia’s economy is highly correlated to China’s. (Reuters)

Source: www.businessworld.ie

More articles from World

image Description

Diageo warns coronavirus could dent 2020 profit by $260m

Read more
image Description

EU ministers to approve negotiating mandate for UK trade talks

Read more
image Description

European shares brace for worst day since 2016 as virus risks grow

Read more
image Description

Sterling drops as spreading coronavirus sends investors into dollars

Read more