The US dollar is higher against the Canadian dollar on Friday morning after the World Health Organisation designated the coronavirus outbreak in Wuhan China a global public health emergency, fuelling a further sell-off in Asian currencies and extra demand for the US dollar.
USD/CAD was higher by 20 pips (+0.15%) to 1.3226 with a daily range of 1.319 to 1.323 as of 9.30am GMT. The currency pair had seen a drop below 1.32 late on Thursday but has subsequently rebounded to new highs for the week.
USD/CAD – Ongoing coronavirus concerns drove the demand for the US currency
Ongoing concerns about the coronavirus, now designated an international health emergency by the World Health Organisation (WHO) drove the demand for the US currency. The WHO chief Tedros Adhanom Ghebreyesus said the “The main reason for this declaration is not what is happening in China but what is happening in other countries.” The WHO seem to be satisfied with China’s response in trying to contain the spread.
The virus has claimed the lives of 170 people, spread to more than 7,800. The United States confirmed the first person-person transfer and the US State Department has recommend Americans not to travel to China. Additionally, the United Kingdom registered its first two cases on Friday.
In a sign of the pressure on currencies from the Asia-Pacific, the Chinese renminbi dropped below the widely watched 7.00 against the dollar. When Asian currencies are sold, the default transaction will to be buy US dollars.
The Loonie
While calling the coronavirus an emergency the WHO also said “there is no reason for measures that unnecessarily interfere with international travel and trade. This simultaneous recommendation not to restrict travel proved to be a positive influence on oil prices. The large number of airlines cancelling flights to and from China and the resulting reduction in fuel demand had been the primary concern hitting oil prices.
Canada is a big oil producing nation so the pickup in crude oil prices went some way to alleviate the selling in the Loonie. Oil bounced back on Thursday after falling 8 of the last 9 days but is facing losses again on Friday.
