The U.S. Dollar regained some ground as risk-appetite renewed in a major way with news of major stimulus around the globe aimed at lowering the negative impact of the coronavirus.
Overview
Additionally, news that the disease has been mostly contained with the infected recovering in China are sparking hope that activity from the second largest global economy can revamp production. Central banks are also throwing whatever easing measure they can with the Bank of England the latest to cut interest rates as part of a package out together by the U.K. government.
The Mexican Peso, one of the most affected currencies by the losses in oil prices, has been swinging very close to its weakest level on record. Meanwhile, our northern neighbor “Loonie” is near its weakest levels since February of 2016. The wild times will continue as fear over contagion has not faded and institutions as well as companies are cutting on flying, event gatherings, and even promoting or mandating telework. There’s mood for doom still, but also growing sentiment that things can improve. Clarity is losing to volatility.
What to Watch Today…
- No major events scheduled for today.
Complete Economic Calendar can be found here.
EUR
The Euro has been moving a lot and it is possible it could come back down some more pending on the European Central Bank meeting tomorrow. ECB President Christine Lagarde spoke to EU leaders in a conference call warning that this scenario is a similar shock to what she witnessed in 2008, however, she did not promise rate cuts.
She addressed how the central bank can help with liquidity and perhaps expand quantitative easing measures but explained that governments must accompany her efforts with spending. She left a positive feeling that with the right response, this shock could prove to be just temporary. We shall see what they throw at the economy tomorrow.
GBP
Pound Sterling fell as the Chancellor of the Exchequer, Rishi Sunak, announced a 30-billion Pound fiscal package that was accompanied by an emergency interest rate cut of 50-basis points. The current rate is now at 0.25%. BOE’s officials vowed to do whatever necessary to keep the economy afloat and the government is willing to spend. Expect downward pressures on the currency as Brexit negotiations become the focus once more now that the mystery of intervention is gone.
