01/ 04/ 2020

Dollar Firms Against The Rivals And Buoys On The Safe Haven Status

The dollar was a touch firmer on Wednesday, buoyed by its safe-haven status with the world staring at what is likely to be one of the worst economic contractions for decades as it locks down to fight the coronavirus pandemic.

It advanced against the Australian and New Zealand dollars, the euro, yen, Swiss franc and pound in Asian trade - but not much - as appetite for the safety of cash dollars was offset by aggressive liquidity measures from the U.S. Federal Reserve.

However that still left the dollar beneath overnight highs against most majors and well below multi-year peaks made last month, before the Fed’s pumped more dollars into the system to calm markets.

The Fed on Tuesday broadened the ability of dozens of foreign central banks to access dollars during the coronavirus crisis by allowing them to exchange their holdings of U.S. Treasury securities for overnight dollar loans.

The dollar was a touch firmer on Wednesday, buoyed by its safe-haven status with the world staring at what is likely to be one of the worst economic contractions for decades as it locks down to fight the coronavirus pandemic.

31/ 03/ 2020

Will a busy economic calendar be enough to distract the markets from the continued spread of COVID-19?

The dollar rose against the yen on Tuesday as Japanese investors and companies rushed to cover a greenback shortage before their fiscal year end, but sentiment remained fragile as the global coronavirus crisis worsened. China’s yuan held steady even after a key survey showed manufacturing returned to growth in March, but investors remain skeptical of the uptick given many businesses are still struggling to resume operations from coronavirus disruptions. The pound fell against the dollar and the euro as a sovereign ratings downgrade continued to weigh on sterling, underlining the public finances strain from a much needed massive fiscal stimulus. Tuesday is the last trading data for Japan’s fiscal year and the end of the quarter for major investors elsewhere, which could lead to some volatile swings as big currency market players close their books.

However, analysts warn that an almost certain global recession due to the coronavirus will remain a dominant influence in trading and eventually favor currencies least affected by the economic downturn.

26/ 03/ 2020

U.S Stimulus Bill and Weekly Jobless Claims to Steal the Show

The dollar fell against the yen and the euro earlier today before data expected to show a surge in U.S. claims for unemployment benefits as companies lay off workers due to the rapid spread of the coronavirus. The pound extended declines against the euro and the dollar due to worries that Britain is not prepared to deal with an increase in coronavirus cases after the flu-like illness ravaged health care systems in Italy and Spain. Investors are anxiously awaiting the passage of a $2 trillion (1.69 trillion pounds) U.S. stimulus package to offset the economic impact of the coronavirus pandemic, but there are already indications that some U.S. states will need more money for medical supplies as the health care system struggles to cope.

It was a quiet start to the day on the Asian economic calendar this morning. There were no material stats to provide direction to the majors. A lack of stats left the majors in the hands of coronavirus news and updates on the progress of the U.S Stimulus Bill on Capitol Hill. The BoE and ECB will garner some attention, though expect updates from Capitol Hill and U.S weekly jobless claims figures to steal the show.

25/ 03/ 2020

Dollar steadies after slide as greenback funding stays tight

The dollar halted its decline and gains in riskier currencies petered out on Wednesday as fresh rises in coronavirus cases kept markets on edge and the greenback funding market tight. Foreign exchange markets were in consolidation as the prospect of a huge US stimulus package bolstered Asian stock markets although gains in riskier currencies were tempered. 

In February, the PMI pointed to expansion, with a reading of 53.2. March is likely to be much weaker as the estimate for the initial reading is 45.0 points. Manufacturers remain pessimistic about order volumes, as the indicator remains mired in negative territory. In February, there was a slight improvement, with a reading of -18, up from -22 points. However, investors are braced for a sharp downturn in March, with a forecast of -38 points.

The February PMIs showed growth in the services sector, but pointed to contraction in the manufacturing sector. Analysts are braced for very soft readings in March as the COVID-19 outbreak has paralyzed the Euro zone economy. Eurozone PMIs are forecast to come in around 40.0 with the French PMI are projected to fall to around 39.5 points. German services PMI is expected in at 43.0 and the manufacturing PMI at 40.1 points.