Today’s Currency News: US Dollar Exchange Rates Skyrocket as Coronavirus Crisis Prompts Fears of USD Shortage

Pound (GBP) Steady on Stimulus Announcement 

The Pound (GBP) traded in a narrow range during yesterday’s session as GBP investors appeared to welcome the UK government’s £330bn coronavirus support package.

In announcing the stimulus Chancellor Rishi Sunak said the UK is facing an ‘economic emergency. Never in peacetime have we faced an economic fight like this one’ and also pledged to spend more if needed.

Looking ahead, GBP investors will remain focused on the government’s approach to coronavirus as they expect the UK to begin preparations to enforce large-scale quarantines similar to its European neighbours.

Euro (EUR) Tumbles as Economic Sentiment Plummets

The Euro (EUR) dove on Tuesday as the latest ZEW surveys from Germany came in well below expectations.

Germany’s economic sentiment index came in at –49.5 this month, plummeting from 8.7 and falling well below expectations of a more modest drop to –26.4 as fears over the coronavirus weighed heavily on the outlook.

Meanwhile, the Euro may face additional pressure today as the EU prepares to ramp up measures to contain the coronavirus.

US Dollar (USD) Rockets on Liquidity Fears

The US Dollar (USD) soared yesterday, appreciating almost 2% against some of its peers as demand for the safe-haven currency due to the coronavirus crisis was exacerbated by concerns of a possible USD shortage.

This uptrend in the ‘Greenback’ also came in spite of a surprise contraction in US retail sales last month.

With the Federal Reserve taking steps to improve liquidity we may see demand for the US Dollar ease somewhat today, but with the coronavirus still dominating headlines the currency is likely to remain well supported.

Canadian Dollar (CAD) Firms as Oil Prices Stabilise 

The Canadian Dollar (CAD) mounted a modest recovery on Tuesday, recouping some of its recent losses as the oil-sensitive currency was supported by stabilising crude prices.

Australian Dollar (AUD) Slumps in Risk Off Trade
The Australian Dollar (AUD) continued to trend lower overnight on Tuesday as coronavirus continued to weigh on market sentiment despite coordinated efforts by global banks and governments to limit the economic impact.

New Zealand Dollar (NZD) Undermined by Coronavirus Fears and Falling Dairy Prices

The New Zealand Dollar (NZD) also retreated overnight, with coronavirus anxiety alongside a sharp drop in prices at the latest global dairy auction both taking their toll on the ‘Kiwi’.

Meanwhile NZD exchange rates may come under further pressure later this evening as New Zealand’s latest GDP figures are expected to report a slowing of growth at the end of 2019.

Matthew Andrews

Contact Matthew Andrews