USD/CHF slides to lowest since February 2018 on oil price war and coronavirus fears
- The safe-haven CHF is drawing bids as investors are selling risk in Asia.
- Fears of an all-out oil price war have bolstered the coronavirus-led risk aversion.
USD/CHF is losing altitude as coronavirus-led risk aversion has intensified with Saudi Arabia launching an all-out oil price war with Russia.
The currency pair fell to 0.9267 in early Asia on Monday to print the lowest level since February 2018 as oil prices collapsed, sending the US stock futures lower and boosting haven demand for the Swiss Franc.
Oil prices on both sides of the Atlantic are currently down over 20 percent. Saudi Arabia, the world's top exporter, stunned the world over the weekend by announcing a discount in oil prices of $6 to $8 to its Asian customers, the US and Europe and said that it will boost production instead of cutting it to arrest the coronavirus-led slide.
The dramatic reversal in Saudi's policy is widely being referred to as the start of a price war aimed at Russia, according to The New York Times.
Russia on Friday refused to join the Organization of the Petroleum Exporting Countries in a large production cut. The Opec+ meeting was expected to agree to deeper cuts of 1.5 million barrels per day to counter the effects of the novel coronavirus,
The oil price sell-off has bolstered the risk-off tone already prevalent in markets due to the outbreak of coronavirus outside China.
Currently, the futures on the S&P 500 are down over 4 percent and the US 10-year yield is seen at 0.53% – down 17 basis points on the day – having hit a record low of 0.495% in early Asia.