Safe haven currencies, namely the Swiss Franc and Japanese Yen, saw significantly renewed interest during the trading session in London on Tuesday, especially against the US Dollar. Investors are weighing how the possibility of global easing of the money supply will remedy the damage caused to the global economy from the outbreak of the Coronavirus. Today, governors of the major central banks in conjunction with the finance ministers of the G7 will be discussing via a conference call, how best to handle the growing crisis from a monetary perspective. One strategist said that she didn’t believe there would be any efforts that could considerably make a difference.
As of 11:12 am in London, the USD/JPY was trading at 107.9030 Yen, down 0.39% and off the session trough of 107.657 Yen. The USD/CHF pair was also lower at 0.9573 Swiss Francs, a loss of 0.17%; the pair has ranged from a low of 0.95655 Swiss Francs to a peak of 0.96018 Swiss Francs in today’s session.
Central Banks Respond to Viral Outbreak
In Australia, the central bank announced a 25 basis points cut to its benchmark rate, now at 0.50%. The Reserve Bank of Australia statement which followed said specifically that the bank’s move was in an effort to the growing threat of the virus. The governor, Philip Lowe, also said that the bank was ready to provide more accommodation if and when needed. After the news of the RBA rate cut broke, the US, the US President called on the Federal Reserve Bank to act similarly. The Federal Reserve Bank is an autonomous institution, however, and any actions are in response to its dual mandate of full employment and price stability.