24/ 03/ 2020

Dollar Soars, Boosted by worries over Coronavirus Impact

The euro declined against the U.S. dollar on Monday as investors continued hoarding dollars in a bid to stay liquid amid a worsening coronavirus epidemic. A rising tide of national lockdowns and restrictions on travel and daily life has heightened fears of a deep recession, overshadowing efforts by policymakers to soften the blow. Despite recent easing measures by the U.S. Federal Reserve, the dollar has maintained its strength as the uncertainty around the virus spread and its impact has accelerated the flight to cash and pushed investors to liquidate holdings across asset classes. Sterling declined against the dollar as investors dumped currencies they consider riskier to own amid the coronavirus pandemic. Sterling has been under pressure because of a massive wave of selling of most currencies other than the dollar, which is the world’s most liquid currency and the safe haven of choice when confidence evaporates from financial markets. The pound has also been hit by investor concerns that Britain’s approach to dealing with the virus, which has seen a more staggered disruption to economic and everyday life than in other countries, is not the right one.

Looking ahead, it’s a particularly busy day ahead on the Eurozone economic calendar. March prelim private sector PMIs are due out of France, Germany, and the Eurozone. From the U.S, private sector PMIs for March are also in focus and, while we may see slightly better numbers, there will likely be worse to come. On the political front, there will also be the U.S stimulus package to consider. A passing of the Bill would be market positive.

23/ 03/ 2020

Week Ahead | Economic Uncertainty and COVID-19 Outbreak Continues...

Markets are back in risk averse mode as another week starts, after Spain and Italy suffered the worst days of coronavirus pandemic over the weekend. The dollar rose against major currencies earlier today as fresh declines in global stocks and worries about tightening liquidity amid the worsening coronavirus crisis accelerated the flight to cash. The dollar rose against sterling toward its strongest since at least 1985. The U.S. currency hit the highest in almost three years against the euro; approached an 11-year peak against the New Zealand dollar as the country prepared to enter lockdown for the next 48 hours to contain the virus. The greenback also rose toward a 17-year high against the Australian dollar.

Investors have been liquidating positions in safe-havens and other riskier investments to keep their money in dollars due to the uncertainty caused by the epidemic. Major central banks have ramped up efforts to ease a global dollar funding crunch, but the U.S. currency remains in demand due to the high degree of uncertainty about the unknown flu-like virus. It has also surged against many emerging market currencies, highlighting the growing sense of risk aversion across the globe.

The COVID-19 outbreak continues to dominate the news, as the virus has paralyzed the global economy and caused a meltdown on the financial markets. Looking ahead, we’ll get a look at manufacturing PMIs in the US., the UK and the eurozone. The UK releases key employment data and the Bank of England holds its scheduled policy meeting .Expect a tough week ahead. Economic data will give the markets an idea of just how bad things are. The COVID 19 numbers are also likely to cause alarm.

22/ 03/ 2020

COVID-19 Update - Our Pro-Active Approach

During the past few days, the Corona Virus which was declared by WHO (World Health Organization) as a global pandemic has been slowly escalating, affecting the whole world along with the UAE. During this time our main priority is to safeguard our employees and our clients. We have implemented precautionary measures with adherence to the guidelines by the UAE government and health authorities.

 

19/ 03/ 2020

ECB, Government Action and U.S Stats to Be Closely Watched

Economic data took a back seat once more as the market panic returned over the widening shutdown in the EU in a bid to contain the virus.With the 1st quarter rapidly coming to an end and the EU only just shutting down its borders, there has been a realization that the economic damage is going to be far greater than had initially been anticipated. Things were no better in the U.S, as demand for the Dollar surged amidst the continued rout in the global financial markets. Oil prices tumbled to $20 a barrel as the markets sold the kitchen sink. For Russia, who were playing hardball with OPEC, it may be well too little too late. The Saudis announced on Wednesday that they will maintain supply at 12.3m bpd levels in the months ahead and that’s going to hurt Russia. Russia’s oil production costs are estimated at around $20 per barrel compared with sub-$10 per barrel for the Saudis. 

The British pound plunged on Wednesday to its lowest level against the dollar since 1985 and to a more than decade-low versus the euro as coronavirus fears and a global rush to hold dollars overshadowed stimulus efforts. Sterling has come under fierce selling pressure since hitting a two-month high above $1.31 last week but the selloff accelerated yesterday as traders dumped positions across the board in a mad scramble to get their hands on dollars. The euro rose against the dollar and the pound after the ECB announced a 750 billion euro asset-purchase programme in response to the coronavirus outbreak. Analysts say the euro’s gains could be short-lived because many investors are selling what they can to keep their money in dollars due to the unprecedented amount of uncertainty caused by the virus epidemic.

It’s another tricky day ahead for the majors, with the ECB moves providing support but not a major boost ahead of the open.