As worries grew about the economic impact of China virus outbreak demand spikes for safe-haven assets. Commodity-linked currencies fell.
Growing fears about the spread of a coronavirus from China pushed investors into safer assets. The rise of the death toll from China virus outbreak and the growing of the businesses forced to shut down stoked expectations of slowing oil demand.
Health authorities around the world are working to prevent a pandemic of the virus, which has killed more than 80 people in China. Nearly 2,800 people have been infected globally. China’s National Health Commission said on Sunday the ability of the virus to spread was getting stronger.
China’s government announced it would extend the Lunar New Year holidays to help prevent and control the virus.
The rapid spreading of the virus fuelled fears of slowing oil demand and raised speculation that OPEC and its allies including Russia, a group known as OPEC+, will consider deepening production cuts.
START TRADINGForex – Safe heavens gain on China virus outbreak
Traders said market moves could be exaggerated by low liquidity. Financial markets in China, Hong Kong, Singapore, and Australia are closed for holidays.
The U.S. dollar index was flat at 97.849.
The yen rose as high as 108.73 yen but was last down 0.3% at 108.91 yen per dollar.
The Australian dollar, which is exposed to the Chinese economy, dropped 0.8% to $0.6771, its lowest since Dec. 2.
The New Zealand dollar weakened 0.7%.
The euro fell to a two-month low against the yen of 119.94 yen. 0.4% lower. It also lost ground to the Swiss franc, slipping to a 33-month low of 1.0689 francs per euro. The euro erased its earlier gains against the dollar after the Ifo institute said that German business morale deteriorated unexpectedly in January. The euro was unchanged at $1.1026.
Britain’s pound 0.2% to $1.3090. Positioning data last week showed investors reducing their net long position in the pound before a Bank of England decision on Thursday about whether to cut UK interest rates.
Crude prices extended declines on Monday, dropping below $60 for the first time in nearly three months. Brent crude fell by $1.95 a barrel, or 3.2%, to $58.75 by 1128 GMT, its lowest since late October and the biggest intra-day fall since Jan. 8. U.S. crude was down by $1.77, or 3.3%, at $52.42.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money