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Giles Coghlan B. G., Opalesque Geneva:

Giles Coghlan, chief currency analyst at HYCM, a forex broker, shares his take on currencies, cash, recovery, and oil.

Opalesque: You say the USD, the JPY and the CHF act as safe-haven currencies. Do you think that is likely to last?

Giles Coghlan: The typical reaction that we would expect in a risk-off environment, which we've seen due to the Covid-19 crisis, is Japanese Yen (JPY) and Swiss Franc (CHF) strength. On certain occasions, the US dollar (USD) operates as a safe haven in times of extreme crisis, like the 2008-2009 global financial crisis. We've seen exactly the same pattern now. Whether the dollar, yen and Swiss franc last as safe-haven currencies, it depends on how quickly or slowly we emerge from the current crisis.

Opalesque: And if we don't emerge soon?

G. C.: Looking at the 2008-2009 crisis, one helpful indicator I like to use is the VIX - the volatility measure of the S&P 500. When it was elevated, equity markets sold off very heavily. About four months after the peak of the VIX, we started a recovery in US stocks. So, if we saw a similar path in the current Covid-19 crisis, I would expect global equity markets to have bottomed-out by around July-August, when the VIX has gone to its highs and then goes to more normal levels, and the markets are more reassured.

But there are some differences betwee......................

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