29/ 04/ 2020

Q1 GDP Data and Monetary Policy in Focus

The dollar eased on Wednesday as the slowing spread of the coronavirus and moves to re-open economies encouraged investors’ to favour riskier assets, though there was caution ahead of central bank meetings in the United State and Europe.
Investors will be watching for clues on the Fed’s future policy path after it responded to the economic devastation of the COVID-19 pandemic by slashing rates, buying bonds and backstopping credit markets. According to analyst, Fed’s view of the extent of the economic contraction caused by the coronavirus, and how long it might hold rates at emergency levels, will be of key interest to investors.
Data released overnight had shown U.S. consumer confidence slumped to a six-year low this month.
Macroeconomic action will kick-start with the US releasing the preliminary estimate of Q1 GDP and the Fed announcing its latest decision on monetary policy. Growth in the country is seen contracting by 4.0% in the three months to March. 
The dollar was a touch softer against a basket of currencies at 99.685 =USD. The British pound GBP= was marginally steadier at $1.2469, as was the euro EUR= at $1.0846.

28/ 04/ 2020

Economic data to Take a Back Seat, COVID-19 News and Crude Oil to Test the Market

The U.S. dollar fell across the board on Monday as several countries laid out plans to ease restrictions on businesses that have been closed due to the novel coronavirus outbreak. The dollar fell 0.19% against a basket of currencies, USD to 100.05. The euro gained against dollar as traders grew less averse to risk amid an easing in coronavirus lockdowns in several countries. Credit-rating agency S&P reaffirmed on Friday Italy’s BBB rating, although many had expected a downgrade, supporting the common currency by limiting the escalation of an economic and political crisis on the continent. The U.S. dollar was weaker against the euro as investors turned more positive on Italy and saw the Bank of Japan continuing to support an economy battered by the virus.  Sterling rose against dollar as sterling was boosted by improving global risk appetite and hopes that lockdown measures may start to be eased as the number of coronavirus cases in Britain appears to slow. Britain is now seeing a downward trend in the number of people who are in hospital with the new coronavirus, the national medical director of England’s health service said on Sunday. The pound against a broadly weaker dollar, was up 0.4% at $1.2435.

Economic data to take a back seat. Sliding oil prices, updates on COVID-19, and corporate earnings will test risk appetite on the day.

27/ 04/ 2020

Week Ahead | Monetary Policy, Economic Data, COVID-19, and Geo-politics are in Focus

The unimaginable negative oil price was the biggest head-liner last week. But the impact on other markets were relatively short lived. Canadian Dollar was much bothered for most of the week, but eventually it’s just the second worst performing, following Sterling. On the other hand, Australian Dollar ended as the strongest, followed by Yen, and that’s a sign of indecisiveness during consolidation in risk markets.

The yen held its ground on Monday after the Bank of Japan removed limits on its government bond purchases and increased corporate debt buying to help companies hit by the coronavirus crisis. The BOJ’s decision was widely in line with expectations, so traders instead shifted their focus to a U.S. Federal Reserve meeting ending Wednesday and a European Central Bank (ECB) meeting Thursday as major central banks once again take the stage as the global economy battles against a deep depression. The Fed has already announced a raft of measures and is expected to stay on hold this week, which is unlikely to trouble the dollar, analysts say. The stakes are higher for the euro, because the ECB is likely to extend its debt purchases to include junk bonds, and some investors are worried this decision could widen rifts between members of the European Union.

Japan, like most major economies, has urged businesses to close and encouraged people to stay at home to slow coronavirus infections, which is causing a widespread downturn. In Europe and the United States, officials are now moving to ease some of these restrictions, but currency traders say they remain wary because threats posed by the virus have not been eliminated completely. The dollar has risen in recent weeks due to a dollar funding crunch and safe-haven inflows, but some analysts say the greenback is likely to fall in the long term because the Fed has eased monetary policy more aggressively than other central banks.

23/ 04/ 2020

April PMIs, Brexit Talks, an EU Summit, and COVID-19 to Keep the Markets Busy

The dollar edged higher against the currencies of oil producers on Thursday as a rebound in crude prices from an unprecedented collapse only partially calmed markets unnerved by the massive coronavirus-led drop in global demand. The euro held steady against the greenback and the pound ahead a of meeting of European Union officials on the bloc’s response to the economic turmoil caused by the global coronavirus pandemic. It may take EU countries until the summer or even longer to agree on how exactly to finance aid to help economies recover as major disagreements persist, a bloc official said on Wednesday. Analysts say sentiment is still supportive of the U.S. currency because the coronavirus outbreak is driving a global depression, which will encourage investors to opt for the safety of holding their funds in dollars. The European Central Bank has agreed to accept junk bonds as collateral to allow banks to finance themselves at the ECB, which should be a positive factor for the euro, but investors are waiting for details on the fiscal response. The dollar was little changed versus the yen as the pair remains stuck in a holding pattern.

It’s a hectic day ahead. Private sector PMIs, an EU Summit, Brexit talks, and further updates on the coronavirus and lockdown measures are in focus.