The U.S. dollar weakened modestly throughout yesterday’s session as risk-on sentiment caught on around the globe and U.S. equities rallied 7%.
Overview
The dollar is in a free fall this morning as global equity boards are a sea of green, a welcome sign. Some of the biggest movers were those that fell the most versus the mighty greenback during March, including the Mexican peso and the Norwegian krone.
The headlines do seem to contradict each other. China reported no new cases for the first time and there were more signs that the virus may have peaked in parts of Europe and possibly New York. However, there were more warnings that the next couple of weeks will be rather tough. Japan’s Prime Minister declared a state of emergency and announced a $1 trillion dollar stimulus plan.
There is only stale data slated for release today in the States. We will look for headlines surrounding perhaps another U.S. stimulus bill and news out of the European finance minister meeting (more below).
What to Watch Today…
- EU Finance Ministers at 11 am; press conference to follow.
Complete Economic Calendar can be found here.
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EUR
The Euro is in rally mode this morning, gaining over 1% overnight and extending those gains in early trading. The focus this morning will be on a virtual meeting of European finance ministers that is scheduled to start at 11 a.m. Eastern. The ministers will be trying to address the steep fiscal costs of the coalition’s response to the global pandemic. A press conference is expected to follow meaning that we might not get any details until late in our trading session. Expect EUR/USD to be susceptible to headline risk.
GBP
The British pound was able to take advantage of broad dollar weakness and a return of risk appetite. The 1.0+ % gain comes even after the news that Prime Minister Boris Johnson was moved into the intensive care unit as his Covid-19 symptoms worsened. Details have been sparse, but it is reported that Mr. Johnson is conscious and has received oxygen, but he has not yet been put on a ventilator. Dominic Raab, the Secretary of State, will assume most of the Prime Minister’s responsibilities.
