18/ 03/ 2020

Economic Data to Take a Back Seat Once More As Governments Step Up to Combat COVID-19

The U.S. dollar surged on Tuesday as companies and investors sought out the most liquid currency on concerns about economic shutdowns from the global spread of the coronavirus. The yield on benchmark U.S. 10-year Treasuries jumped 34 basis points higher overnight, the largest single-day rise since 2004 - further illustrating how massive selling is testing liquidity in even the deepest and broadest markets. The higher yield also adds yet more attraction to owning dollars, amid growing signs of tight supply - especially abroad.

Meanwhile the coronavirus only spreads, as country after country adopts draconian social restrictions and a war-footing mentality to try and contain the outbreak. The global death toll is above 7,800, the number of cases is approaching 200,000 and the economic fallout of what is in effect a global lockdown is spiraling. In UK, the government has placed the economy on a wartime footing to support businesses and people affected by coronavirus, announcing state-backed loans of at least £330bn as the outbreak escalates.

It’s another testy day ahead for the markets as the virus spread continues and governments look to take further measures to combat the virus.

17/ 03/ 2020

Economic Data Puts the EUR, GBP and US Dollar in the Spotlight While Coronavirus will Continue to be in Focus

The dollar fell when U.S. Federal Reserve cut interest rates to near zero on Sunday, since the move blew away the yield on owning dollars and with it much of their attraction. Yet few are willing to bet on a prolonged decline. Pandemic fears are roiling markets, driving a scramble for both safety and funding in the world's reserve currency. Analysts are already discounting the dollar's slide on Monday as modest and maybe temporary, given the scale of the Fed's emergency move. They are also drawing a distinction between the unwinding of the dollar's yield and what happens next.

It was a particularly bearish start to the week, with the European majors seeing deep red on Monday. While economic data out of the Eurozone had a muted impact on the majors, monetary policy and stats out of China disturbed the majors. 

Economic data will garner some interest today, though much will depend on the news wires. Market sensitivity towards the virus is not going to ease anytime soon.

16/ 03/ 2020

Week Ahead | Fed brings out big guns, investors fear the worst

The dollar fell against a broad range of currencies on Monday after the U.S. Federal Reserve made another surprise interest rate cut and major central banks took steps to relieve a shortage of dollars and provide extra liquidity. The U.S. Federal Reserve cut rates to a target range of 0% to 0.25% on Sunday, U.S. time, and said it would expand its balance sheet by at least $700 billion in the coming weeks.

The People’s Bank of China injected 100 billion yuan ($14.28 billion) into financial institutions on Monday but left borrowing cost on its medium-term loans unchanged. The move came minutes before data showed China’s retail sales, industrial output, and fixed-asset investment in January and February all tumbled.

On Monday, China is to release data on industrial production, retail sales and fixed asset investment for February, which will give investors an insight into damage the coronavirus lockdown inflicted on the world’s second-largest economy.

In the U.S. figures on industrial production and retail sales for last month will indicate how the economy was doing as the coronavirus outbreak emerged, while manufacturing indexes and housing sector data may point to effects from the virus.

In the Eurozone, Tuesday's Germany’s ZEW investor confidence indicator is expected to decline sharply amid major economic disruption caused by the pandemic to one of the world’s most trade-dependent economies.

12/ 03/ 2020

Corona Virus Pandemic: Central Banks Interest Rate Cuts, ECB in Focus

Yen surges in Asian session as sentiments are knocked down hardly by US ban of European travellers. Global coronavirus cases jumped to 126,367 with 4633 deaths. Situation in Europe continue to worse, particular dire in Italy, cases in US also rose above 1,300. Nevertheless, new numbers in China, the origin of the global pandemic, are kept in low levels. Swiss Franc is currently the second strongest on risk aversion. Euro is following closely but it’s subject to risks from ECB’s coronavirus response package today. Australia Dollar is the weakest for today, followed by New Zealand. Canadian Dollar is just mixed. While oil price dip following US travel ban, it’s held well above 27.50 low for now.

It’s a relatively busy day ahead on the Eurozone economic calendar. Eurozone industrial production figures for January are due out later today. With the January numbers too early to reflect the effects of the coronavirus, we would expect any positive numbers to be brushed aside. Italy’s shutdown in the north and the spread of the virus across Europe suggests some dire numbers ahead. And that’s before factoring in an expected slide in demand from the East and the effects of supply chain disruption. Outside of the numbers, however, the ECB monetary policy decision and press conference will be the main event on the calendar. Expect a slide in the majors should the ECB decide to leave interest rates unchanged.

Any chatter from governments and news updates on the spread of the coronavirus will also be in focus throughout the day.