1. Newsroom
  2. COVID-19 and the US dollar
Menu
洞见 18.03.2020

COVID-19 and the US dollar

COVID-19 and the US dollar

Our Global Head of Forex Strategy Peter Kinsella discusses the impact of COVID-19 on the US dollar and on the wider currency universe.



On Sunday evening, the US Federal Reserve reduced the federal funds rate by 100 bps, bringing its base rate to between 0.0% and 0.25%. The Fed also announced a reduction in the cost of its USD swap facility with five other major central banks, in order to ease USD funding concerns. The 100 bps cut was the Fed’s second emergency rate cut in as many weeks. However, the dollar appreciated significantly following the Fed’s latest policy move, reflecting ongoing funding concerns in both developed and emerging markets. Measures of USD demand are best captured by the EUR/USD cross-currency basis, which widened considerably in recent sessions. 

In this podcast we explain the dynamics behind the recent bout of dollar appreciation as well as what measures the Fed needs to take to calm markets and weaken the currency. In the short term, we continue to believe that safe-haven currencies like the Japanese yen and the Swiss franc offer a compelling risk/reward profile. Although gold prices have not performed as well as we expected, they remain a valuable part of any investment portfolio in the current environment.

Our expertise

Peter_Kinsella_150x150.jpg
Peter Kinsella
Global Head of Forex Strategy

Expertise

Global equities

Invest in companies with superior and sustainable value creation.


延伸阅读

洞见 27.03.2024

Four reasons to consider global SMID caps in 2024

As the “Magnificent 7” generate risks in the segment, diversification within equities becomes key. Global small- and mid-cap (SMID) stocks, represented by the MSCI World SMID Cap Index, are emerging as a compelling option.

洞见 14.03.2024

India: A New Driver Emerges

Driven by Prime Minister Narendra Modi’s economic programme, India has embarked on a phase of infrastructure investment akin to China’s in the 1990s. In our latest edition of UBP Headlines, our Group Chief Strategist Norman Villamin takes a deep dive into the booming Indian market, exploring its investment opportunities.

洞见 12.03.2024

Why Swiss equities should be considered in every equity allocation in 2024

Investors may find the strong fundamentals and stable economic, political and social aspects of Switzerland attractive in terms of equity investments in a year which may be dominated by geopolitical newsflow.