Dollar Edges Higher; Loonie Downside Risk as BoC Meets
Investing.com - The U.S. dollar edged higher Wednesday as traders took a calmer view of the emergence of the pneumonia-like virus in China, but its gains were minimal and caution was still abundant.
At 04:10 ET (0910 GMT), the US Dollar Index Futures, which tracks the greenback against a basket of other currencies, was up 0.1% at 97.42. The yen dropped 0.1% against the dollar, with USD/JPY trading at 109.97. EUR/USD traded 0.1% at 1.1079 and GBP/USD at 1.3043, down 0.1%.
As of early Wednesday, Chinese authorities confirmed that at least nine people, all in Wuhan, have died after contracting the virus and a total of 15 medical personnel have been infected.
"The obvious comparison people are making is with the SARS. While we still don't know how lethal the new virus will be, my sense at the moment is that markets are not taking it as dire as SARS," said Kyosuke Suzuki, director of currencies at Societe Generale (PA:SOGN), in a Reuters report.
"Back then, virtually every company was banning travel to Hong Kong. We haven't seen that kind of reaction yet," he said.
The 2002 SARS pandemic resulted in more than 8,000 people across 37 countries being affected, with around 800 deaths.
Looking ahead, the Bank of Canada holds a rate-setting meeting later Wednesday, markets are widely expecting no changes in the policy rate.
However, the Canadian dollar has downside risk on the back of this meeting, according to Francesco Pesole, an analyst at ING, in a research note.
“Investor sentiment around the prospect of BoC easing has shifted significantly in the past few months,” he said. But “we suspect that a downward revision to the GDP forecasts .… may be on the cards. With any significant change in the monetary policy stance unlikely for now, those projections have the potential to determine most of the market reaction.”
At 04:05 AM ET (0905 GMT), USD/CAD traded at 1.3077, up 0.1%.
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