The US dollar has been paralyzed versus the safe-haven currency of the Japanese Yen and Swiss Franc since last week. The pressure is easing, but the outlook is still overshadowed by uncertainty.

The battered US dollar versus the safe-haven currency duo of the Japanese Yen and Swiss Franc since last week, amid intense market concerns over the risk of coronavirus outbreaks (COVID-19). When the news was written in the middle of the European session (March 3), the US Dollar slumped in the range of 0.9576 against the Swiss Franc, not far from the 18-month low reached yesterday. The position of USD / JPY is also confined in the range of 107.95, near the record lows this year.

The rate of decline of the USD began to slow down today because there are expectations for recovery of risk sentiment soon. The market expects the governments and central banks of various countries to pour out stimulus to sustain the economy. The decision of the Australian central bank this morning to cut interest rates by 25 bps also fanned these expectations. However, the realization of policies taken by various countries will not necessarily satisfy the market.

The central bank governor and finance ministers of the G7 countries are scheduled to conduct a teleconference today to discuss efforts to deal with the economic impact of the Coronavirus outbreak. A Reuters report that quoted an G7 insider as saying that the draft statement did not promise new monetary or fiscal stimulus.

Making Policies by Launching Stimulus

Some analysts warn the scale of the outbreak is still uncertain. As a result, even if policymakers decide to launch a stimulus, the steps taken are not necessarily adequate.

"For many investors, perhaps, there is a view that the central bank can do many things to treat this crisis symptom, but (actually) they cannot make it disappear completely," said Jane Foley, currency strategist at Rabobank, "There will be uncertainty about the economic impact of this virus, and hence, there is demand for safe havens. "

Going forward, market participants will continue to monitor the prospects of a Fed rate cut and monetary easing by other monetary authorities. The latest statement of the European Central Bank (ECB) regarding readiness to take action, has prompted an increase in market risk sentiment while triggering the weakening of the Euro exchange rate against the USD.

The greenback is trading near the lowest level in nearly two years against the Swiss franc as investors shift assets to safe havens, according to news reported by Reuters on Wednesday (04/03) morning.

USD / JPY has Fallen for Almost Five Months

"The interest rate cut by the Fed is having bad consequences for the dollar/yen, this is because some financial returns are very low for now. The weakness of the dollar is reflected in the euro because the Fed is likely to make it easier for the ECB."

On Wednesday morning the USD / JPY fell to 106.85 yen in Asia, in nearly five months. With an interest rate cut of 50 basis points to the target range of 1.00% to 1.25% on Tuesday by the Fed, it was able to surprise investors.

The failure to cut interest rates to keep selling in US equities and send benchmark 10-year bond yields (US10YT = RR) fell to a record low of 0.906%, reducing the appeal of the dollar.

The coronavirus spread to more than 60 countries and has claimed more than 3,000 lives that appeared in China late last year. The G7 finance minister issued a statement that caused a beating from sentiment, on Tuesday which would stop the preparation of the expenditure budget or coordinate a rate cut by the central bank.