The Canadian dollar has been helped so far this week as the global risk sentiment rose. The risk appetite for investors has increased after developments in China which has lowered the fears surrounding the coronavirus. With the virus knocking a large chunk out of the Canadian dollar’s support at the start of the outbreak, the optimism was welcomed with open arms. However, the World Health Organisation (WHO) has noted that it would not be wise to get too optimistic as the disease is still at large and has spread to other largely populated countries like Singapore where the outbreaks are only just beginning. Meanwhile, GBP continues its recent run of support after the government announced its plans for the new HS2 high-speed rail, it has lifted GBP sentiment as the government looks to pour money into the economy.
Canadian Dollar Lifts on Positive News Surrounding Coronavirus, but Who Warns That Optimism Could Be Foolish
The Canadian dollar suffered heavily after the coronavirus broke out in the Chinese province of Wuhan. As a risk-sensitive currency, CAD sharply fell as investors fled to safe haven currencies following the news fearing the worst for the global economic impact of the disease. CAD is also one of the world’s largest exporters of oil, and following the outbreak, the demand for oil sharply fell as fears grew, leaving the Canadian Dollar faltering on low oil prices. However, in recent days, the Canadian dollar has managed to recoup some of its losses after news surrounding the virus broke suggesting that the number of new cases since January in China have declined, suggesting that the disease may have peaked and is now slowly fading. But the World Health Organisation (WHO) was quick to respond to this, suggesting that over-optimism could be unwise at this stage considering the disease is still at large and outbreaks in other large countries like Singapore have only just begun. But the market appeared not to heed this warning, boosting CAD.
GBP Retains Support as Government Announces New Spending Plans
GBP retains its recent support after the UK government unveiled its new plans for the HS2 high-speed railway this week. The increased government spending has provided GBP with support as it looks to boost the UK’s fiscal stimulus. The UK’s GDP for December grew more than expected which also helped the currency. However, GBP will remain under threat from Brexit and the EU negotiations. Volatility will still be expected as the UK continues to meet with the EU in order to come to a trade agreement.
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