• The dollar under pressure betting markets on the US interest rate cut


    The dollar faced pressure yesterday, with the contraction of flows on the US currency for safety under growing expectations of interest rate cuts to contain the repercussions of the coronavirus.
    According to "Reuters" after sharp losses of US shares in recent days, Jerome Powell, Chairman of the Federal Reserve, said last Friday that the central bank "will act when necessary" to support the economy.​
    Investors saw a hint that the Federal Reserve will cut interest rates when it meets on March 17-18, and they expect central banks around the world to be encouraged to follow suit.
    "This statement is likely to be considered a call to action for other central banks around the world," said Bill Evans, chief economist at Westpac.
    The dollar fell against the Australian dollar, the euro, the British pound, and the yuan.​
    The euro rose in its latest trading 0.3 percent to a monthly peak of $ 1.059. The Australian dollar rose 0.4 percent to hit 0.6531 US dollars, the sterling advanced 0.2 percent to 1.2939 dollars.
    Haruhiko Kuroda, the governor of the Bank of Japan, has already indicated a move, issuing a statement saying that the central bank will take the necessary steps to stabilize financial markets.
    Kuroda's comments curbed the gains of the Japanese yen, which fell 0.2 percent to 108.30 yen to the dollar.
    Backed by a weaker dollar and signs that the epidemic was contained in China, the yuan jumped to a three-week high of 6.9703 to the dollar.​
    ​To that, gold rose more than 1 percent yesterday, recovering from a sharp decline in precious metals in the previous session, amid hopes to reduce US interest rates to reduce the impact of the fast-spreading Coronavirus. By 06:02 GMT, the spot price of gold was up 1.2 percent to $ 1603.99 an ounce. US gold futures rose 2.5 percent to $ 1605.20​.
    ​​Jerome Powell, Chairman of the Federal Reserve, said that while the US economy remains strong, the Coronavirus is "a growing threat" and that the central bank is ready to act if necessary.
    Low-interest rates reduce the opportunity cost of a non-yielding yellow metal drive.
    Other metals also rose after Friday's losses, bringing palladium 1.9 percent in spot deals to $ 2,642.44 an ounce after losing as much as 13 percent Friday - in its biggest one-day decline since the 2008 financial crisis.
    But the gains of palladium and platinum will likely be temporary given the risk of weak demand from industries such as cars due to the Coruna epidemic, said Ajay Kedia, director of Kedia commodities in Mumbai.
    And platinum increased 1.7 percent to 878.48 dollars, while silver rose 2.1 percent to 17.01 dollars after both metals fell to their lowest levels in about six months during the previous session.​

© All Rights Reserved for Asharqia Chamber