mask U.S. President Announces Possible Fiscal Stimulus; Dollar recovers slightly on hopes for stimulus following oil and virus shock

10/ 03/ 2020

U.S. President Announces Possible Fiscal Stimulus; Dollar recovers slightly on hopes for stimulus following oil and virus shock

Daily Update – 10th March 2020

Yesterday’s Focus

  • EUR German Trade Balance s.a. (Jan); German Industrial Production (MoM) (Jan)
  • CNY Consumer Price Index (YoY) (Feb)
  • GBP BRC Retail Sales Monitor (YoY) (Feb)

Yesterday’s Explained

The greenback started to grind higher as U.S. stock futures rose after U.S. President Donald Trump said the White House will hold news conference today about economic measures in response to the coronavirus outbreak. The dollar rose 0.63% to 102.34 yen JPY=EBS, pulling back from the lowest in more than three years. Against the euro EUR=EBS, the greenback rose 0.24% to $1.1400 after falling on Monday to its lowest in more than a year against the common currency. The dollar rose 0.36% to 0.9283 Swiss franc CHF=EBS on Tuesday after three days of heavy selling pushed it to the lowest in almost five years. Data suggests the Swiss National Bank is now ramping up its market interventions to weaken its currency. Against the pound GBP=D3, the dollar rose 0.39% to $1.3075.

 

Today’s Market  

• EUR Gross Domestic Product s.a. (QoQ) (Q4); French Non-Farm Payrolls

 

Today’s Focus  

It’s a relatively quiet day ahead on the economic calendar. The Eurozone’s 3rd estimate GDP numbers for the 4th quarter are due out along with 4th quarter nonfarm payrolls out of France. The markets have little to no interest in 4th quarter numbers, particularly positive ones that are likely to reverse. We have seen the EUR find strong demand in spite of negative deposit rates. It’s hardly surprising when considering carry trade unwinds, with the EUR having been a funding currency for some time now. A lack of interest in the stats will continue to leave the EUR in the hands of market sentiment towards the impact of the coronavirus. There’s also fiscal and monetary policy to consider. While the Eurozone is certainly in for a hit, the U.S economy could be at greater risk from the coronavirus.

For the Pound, It’s yet another particularly quiet day ahead on the economic calendar, with no material stats due out of the UK to provide direction.We’ve seen the Pound find support against the Dollar as market chaos hits riskier assets. This could change, however, should economic indicators begin to point to imminent BoE action.While the markets have priced in a 2nd FED rate cut this month, the BoE could stand pat should the budget and Wednesday’s numbers support a hold.The Pound did sink against the EUR and Yen on Monday, however, which were on the move at the start of the week. Expect speculation over the autumn budget and Brexit negotiations to also influence.

Across the Pond, it’s another quiet day ahead on the U.S economic calendar, with no material stats due out of the U.S later today. While the U.S administration will continue to attempt to restore market stability, the harsh truth remains. As the Chinese government learned quickly, containment is the only way forward. The U.S administration may have already missed the boat. Expect updates on the spread of the coronavirus to continue to influence the U.S Dollar.