The Swiss franc rallied today amid the negative sentiment among investors. The franc is considered a safe currency, meaning that traders prefer to buy it in times of fear and uncertainty. And on Tuesday, there were plenty of news to spook speculators. Currently, though, the Swissie has lost its gains against most other rivals.
The main topic of today’s news headlines was an epidemic of a pneumonia-like coronavirus that has broken out in China. So far, 6 people reported dead from the disease, and Chinese officials confirmed that the infection can spread between humans. The situation can become especially dangerous considering that the Lunar New Year this weekend will result in an increase in traveling to China as the Chinese overseas will go home for the holiday. To prevent the issue, the authorities canceled celebrations.
The International Monetary Fund released a revised World Economic Outlook, downgrading its forecasts for global economic growth. The report stated:
Global growth is projected to rise from an estimated 2.9 percent in 2019 to 3.3 percent in 2020 and 3.4 percent for 2021âa downward revision of 0.1 percentage point for 2019 and 2020 and 0.2 for 2021 compared to those in the October World Economic Outlook (WEO). The downward revision primarily reflects negative surprises to economic activity in a few emerging market economies, notably India, which led to a reassessment of growth prospects over the next two years. In a few cases, this reassessment also reflects the impact of increased social unrest.
Moody’s Investors Service downgraded the credit rating for the Government of Hong Kong to Aa3 from Aa2 and changed the outlook to stable from negative. The agency cited the following reason for its decision:
The downgrade principally reflects Moody’s view that Hong Kong’s Institutions and Governance Strength is lower than previously estimated. The absence of tangible plans to address either the political or economic and social concerns of the Hong Kong population that have come to the fore in the past nine months may reflect weaker inherent institutional capacity than Moody’s had previously assessed. It may also point to more significant constraints on the autonomy of the Special Administrative Region’s (SAR) institutions than previously thought.
USD/CHF traded at about 0.9682 as of 17:06 GMT today after opening at 0.9678 and falling to the daily low of 0.9661. GBP/CHF gained from 1.2593 to 1.2628. AUD/CHF was one of the few CHF-crossed unable to log gains, falling from 0.6649 to 0.6634 after rising to the high of 0.6664 earlier.
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