UK markets closed

Dollar in Demand; Sterling Unpopular

By Peter Nurse - The U.S. dollar has been in demand Tuesday, rebounding from Monday’s losses, as other central banks look to follow the aggressive easing stance recently taken by the U.S. Federal Reserve.

At 04:30 AM ET (0830 GMT), EUR/USD traded at 1.1129, down 0.4%. The U.S. Dollar Index, which tracks the greenback against a basket of six other currencies, stood at 98.493, up 0.4%. USD/JPY fell 0.9% to 106.82. 

Earlier Tuesday the Bank of Japan pumped more than $30 billion into markets with an 84-day dollar funding operation, while the Reserve Bank of Australia announced plans to meet on Thursday two weeks ahead of schedule, suggesting another interest rate cut is on the way.

The global spread of coronavirus has roiled markets in recent weeks, spurring a flight to haven assets, and the U.S. dollar in particular. The move by the Federal Reserve Sunday to slash interest rates to near zero prompted selling in the greenback, but tone that changed Tuesday.

One of the poor performing currencies over the last few weeks has been sterling. The Bank of England is scheduled to hold its next rate-setting meeting on March 26, but a move being made before then cannot be ruled out owing to the intensity of the coronavirus crisis.

The pound has tended to show weakness against the greenback and euro in the current environment of investor fear. A large drawdown in U.K. investments by international investors may well be responsible for this, especially as the U.K. has taken a different stance on combating the coronavirus outbreak than most of its peers.

At 04:10 AM ET, GBP/EUR was quoted at 1.0980, at the start of last week the pair was at 1.1523. GBP/USD is now quoted at $1.2208, and was at $1.32 last week.


Related Articles

Forex - Yen Trades Lower as Asian Stocks Turn Green

Yen firm, riskier currencies wobble as policymakers grapple with pandemic

Near-zero U.S. rates may not sink the dollar