07/ 04/ 2020

Dollar loses grounds as the pandemic grows across borders

The dollar fell against the yen on Tuesday as U.S. stock futures erased gains and traded lower in a sign some investors remain concerned about the economic shock posed by the coronavirus pandemic.

The pound clawed back some recent losses against the dollar, but sentiment for sterling remains fragile after British Prime Minister Boris Johnson was moved to intensive care after his coronavirus symptoms worsened.

The yen was supported against major currencies after Japanese Prime Minister Shinzo Abe unveiled fiscal stimulus worth almost $1 trillion to offset the economic impact of the coronavirus.

Traders warned that further gains in the yen may be limited because Abe has agreed to declare a state of emergency for Tokyo and other parts of Japan to slow coronavirus infections.

Many investors are looking for signs of a peak in the pandemic, but some analysts warn of volatility given the unpredictable nature of the previously unknown virus.

06/ 04/ 2020

A Light Economic Calendar Leaves the Markets in the Hands of COVID-19

It was a bearish end to the week for the European majors on Friday. Economic data on Friday weighed heavily on the majors as the spread of the coronavirus continued across the world. In spite of a continued lockdown in Italy and widening containment measures across the EU, the numbers continue to rise at a marked rate. From the US, while ISM Non-Manufacturing PMI numbers were better than expected, a marked fall in nonfarm payrolls added further pressure. Nonfarm payrolls tumbled by 701k in March, with more dire numbers on the horizon. Not only was it the first fall since late 2010, but it was also the largest fall since the Global Financial Crisis. 

In the currency markets, the pound fell against the dollar and euro earlier today after British Prime Minister Boris Johnson was admitted to hospital for tests after showing persistent symptoms of the coronavirus for 10 days. The yen fell against the dollar and the antipodean currencies after Japanese media reported Prime Minister Shinzo Abe may declare a state of emergency as early as Tuesday to curb an alarming acceleration in coronavirus infections. The dollar was still on the back foot against the euro after last week's data. Also, weighing on sterling is that Britain’s constitution - an unwieldy collection of sometimes ancient and contradictory precedents - offers no formal deputy or caretaker who would take over if Johnson cannot continue to lead.

It was a quiet start to the day on the economic calendar on Monday, with no material stats to provide direction early on. A lack of stats left the markets to react to the U.S labor market numbers and the latest COVID-19 figures.

02/ 04/ 2020

A Choppy Day Ahead, with U.S Weekly Jobless Claims as the Only Distraction

The dollar held gains earlier today as investors rushed to the safety of the world’s most liquid currency given the massive disruption to global trade due to the coronavirus pandemic. Markets were spooked after U.S. President Donald Trump’s dire press briefing late Tuesday, in which he warned Americans of a “painful” two weeks ahead in fighting the coronavirus even with strict social distancing measures. The starkest evidence of the damage came last week when weekly U.S. initial jobless claims, one of the earliest gauges of economic trends, jumped to 3.28 million, blowing past the previous record of 695,000 set in 1982. The pandemic has shown few signs of abating with global cases on track to hit one million within a day or two, stretching over more than 200 countries. While there are signs infections in hard-hit Italy might be levelling off after a few weeks of lockdown, cases are growing rapidly in many other countries including the United States.

Looking ahead, a quiet day on the economic calendar leaves the majors in the hands of government chatter and news updates on the coronavirus once more. Traders seem to be waiting for tomorrow’s non-farm payroll reports before taking the next move. Though, today’s jobless claims might trigger some more volatility too.