The U.S. dollar is under pressure this morning with notable losses against the Euro and the Swiss franc.
Overview
The dollar’s losses come amidst growing speculation that the Fed will find the scope to cut interest rates by 50 basis points later this month in response to the growing coronavirus worries. A second American in Washington State died over the weekend.
Fed Chairman Jerome Powell gave an unscheduled statement Friday and signaled the central bank is willing to take action to insulate the economy. Goldman Sachs is also calling for the Fed to cut interest rates by a full 100 basis points by the summer, putting downward pressure on the buck.
Later this morning, Markit’s manufacturing PMI and ISM manufacturing will cross the wire. Economists expect a modest expansion on both readings. Non-farm payrolls on Friday will remain the largest, non-virus-related risk event on this week’s schedule.
What to Watch Today…
- Markit and ISM Manufacturing Data at 9:45 a.m. and 10 a.m.
Complete Economic Calendar can be found here.
JPY
The Japanese yen is stronger again this morning and has begun to stand out as the favorite asset of safety. Aside from coronavirus fears, the yen found support after a worse-than-expected Chinese manufacturing PMI print released over the weekend. The index fell to 35.7 in February, down from 50.0 in January. A reading under 50.0 shows a contraction.
GBP
The British pound was unable to take advantage of dollar weakness and continued to flounder. Sterling fell to its weakest level since October against the Euro as the U.K. began its official trade negotiations with the European Union. The Economist magazine pointed out over the weekend that policy experts see about a 50/50 chance of a no-trade deal scenario materializing.
It will not affect currency markets, but news broke over the weekend that Prime Minister Boris Johnson and his girlfriend will be getting married and they are expecting their first child. Cheers to them!
