US dollar index tumbles below 95.00, the lowest since Oct 2018
- DXY tanks in sync with Treasury yields as risk-off worsens.
- Coronavirus updates to drive the market sentiment.
- Oil plunge also tempers the market mood.
The US dollar remains broadly battered for the fourth consecutive day on what seems to be Black Monday, with a flash crash seen across the fx space and Asian stocks smashed alongside Wall Street futures and Treasury yields.
With intensifying panic around the coronavirus outbreak globally and over 25% slump in oil prices, in the wake of the Saudi Arabian and Russian tussle, investors fled to safety in the US bonds to hedge the economic fallout, which led to over 30% crash in the US benchmark 10-year Treasury yields.
The 10-year US Treasury yields hit a record low of 0.477 in the last hour after USD/JPY saw a flash crash to the lowest levels since November 2016 at 101.59, which eventually dragged the US dollar to a new 17-month low of 94.90 against a basket of six major currencies. At the press time, the spot trades near 95.25, still down 0.75% on the day.
Moreover, CME’s FedWatch tool showed that markets see an 84% chance that the Federal Reserve (Fed) will cut its benchmark borrowing costs by 75 basis points when it meets March 17-18. The expectations of a steeper rate cut also exacerbated the pain in the buck.
Looking ahead, the risk-off sentiment amid heightening fears over global economic fallout from the infectious disease will continue to lead the way, as any macro news will play second fiddle.
US dollar index technical levels to watch