By Peter Nurse
Investing.com – The U.S. dollar remained in demand Tuesday, boosted by its safe haven status as the coronavirus outbreak continues to spread and also by signs of strength from the U.S. economy.
At 03:00 ET (0800 GMT), traded at 1.0911, marginally up on the day, after falling to a four-month low on Monday. Similarly, traded at 1.2909, just 0.1% lower, having touched a two-month low of $1.2870 Monday. Futures on the , which tracks the greenback against a basket of six other currencies, stood at 98.773, up 0.1%, having climbed as high as 98.858 on Monday, its highest level since mid-October.
The death toll from the coronavirus continues to mount, claiming over 1,000 victims in mainland China and infecting over 40,000 people.
Measures of returning workers and passenger traffic flows within China suggested the virus had “a devastating impact on China’s economy in January and February,” said analysts at Nomura in a research note.
Anticipation of lower Chinese demand has has kept commodity-like currencies on the defensive for the last couple of weeks, with the dollar still close to a 10-year low and the Brazilian real, Russian ruble and South African rand all falling by between 3.7% and 5.6% over the last month.
“The coronavirus hitting has money going into the U.S. dollar,” said Westpac FX analyst Imre Speizer in a Reuters report. “You’ve seen a good run of economic data in the U.S., that’s been another support.”
On Friday, the U.S. nonfarm payrolls for December continued to show robust employment growth, while sentiment surveys have tended to surprise to the upside.
Attention now turns to the testimony from Federal Reserve Chairman Jerome Powell to Congress, on both Tuesday and Wednesday.
The Fed has made clear its intentions to keep its powder dry regarding interest rates in the near future.
Also of interest will be the release of the U.K. figure for the fourth quarter of 2019, at 04:30 AM ET (0930 GMT).
The U.K. economy probably narrowly avoided a contraction at the end of 2019, with the Investing.com poll forecasting no growth on the quarter, resulting in annual growth of 0.8%.
Any upside surprise could boost a weak pound, but the tricky trade negotiations with the EU are likely to leave sterling on the back foot for the foreseeable future.
Also of interest will be a speech by European Central Bank President Christine Lagarde at 09:00 AM ET (1400 GMT). The central bank is in the middle of a major strategic review, and any comments from Lagarde over whether it changes its inflation goal will be of interest. Chief economist Philip Lane and newly-appointed board member Isabel Schnabel are also due to speak in the course of the day.
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