The U.S. Dollar and all assets across the board are trading in panic mode after a weekend that only saw troubles exacerbate further.
Overview
Indeed, we are in the middle of an oil price war and equities as well as treasury bonds all dramatically declined. FX-wise, the safe-haven Japanese Yen has been a major beneficiary from the turmoil hiking by over 3.3% and the Swiss Franc also by 1.5%. Sterling and Euro have climbed rapidly, with the latter at its best levels since the start of 2019.
On the other hand, petro-currencies such as the Mexican Peso and the Norwegian Krone are near all-time record lows with NOK trading at its worst since 1985 and MXN since 2017. We shall see if any recovery or comeback mounts with virus-related positive developments. Otherwise, it seems like the Russia-Saudi Arabia impasse may be yet another ball on the chain that drags the economy towards recessionary pressures. We are at this point as shocked as anyone and will monitor and follow carefully. The plunge is significant and concerning.
What to Watch Today…
- No major events scheduled for today.
Complete Economic Calendar can be found here.
EUR
The Euro has surpassed even the most optimistic forecasts for increase in value as its appreciation is at the best in 14 months. The oil-supply problems to come are creating a need to seek other assets and the carry-trade value of the shared currency helps in moving towards items that will have some chance of increasing in price in the future. Most oil contracts are in U.S. Dollar thus why the value of the currency as a means of exchange has diminished tremendously. We shall see what else awaits in these wild times
MXN
The Mexican Peso is sure to move plenty as traders and investors digest the possibility of a recession based on growing pessimism and the added worry over oil-futures. Emerging Markets were hurting already from the slow-down in economic activity globally, but today’s hit may have the most impact on the currency’s outlook.
Reaching almost its worst record ever, this morning saw the Peso swing back a bit as the American trading session initiated. Stand by, more to come as we try to navigate tough waters. The fall has been so bad that even S&P fell to the limit 7.0% at which trading is mandated to stop and halt until further notice.
