The U.S. Dollar is trading in mixed ranges primarily as a result of the shock interest-rate cuts taken by the Fed as an emergency measure.
Overview
A move perceived by many as just further panic, the 50-basis-points reduction was the deepest since 2008. Now that the Fed has acted, U.S. stock markets are hoping to mount a major comeback with sessions in Asia and Europe already seeing indexes rise by 1.5% on average. A weakening buck is natural seeing the easing taking place, but volatility is high, and anything can happen.
Meanwhile, the coronavirus remains a cause for physical concern in Europe where much like in China, Italian authorities have mandated closings and businesses have proceeded to take precautions on their own. Other cases have popped, but now focus seems to be more on revitalizing activity and keep combating the impact of shutdowns as well as delays that have emanated from the uncertainty. We shall see if any headlines surprise us again as these are far from dull times.
What to Watch Today…
- Bank of Canada Meeting 10AM
Complete Economic Calendar can be found here.
EUR
The Euro has climbed by 3.0% in value since February 20th, marking its strongest rise since October. However, the Euro is back to where it started for the year, basically totally erasing the losses that made it sink to its weakest level since 2017. While a lot of the crazy turnaround can be credited to easing from our central bankers, it must also be recognized that February Purchasing Managers’ Index data was impressive.
Germany, France, Italy, and Spain all saw better expansions than in January, but were just slightly off expectations for the whole bloc with a reading of 52.6 instead of 52.8. The virus can be blamed for taking momentum away from our forecast economic recovery in the continent. We shall see if the shared currency can sustain this value, that seems fair.
CAD
The Canadian Dollar is down 2.8% thus far in 2020, a major victim of the fear across industries over the coronavirus scare. Oil prices tumbling and a bleak future for the demand of fossil fuels in general have dampened our estimates for “Loonie” appreciation.
Furthermore, we believe the Bank of Canada may find itself pressured to join the chorus of loosening and cut into their benchmark interest rate today. We will know their decision at 10AM and watch out for the fluctuations since the cut by the Reserve Bank of Australia actually worked as a boost to the Antipodean currency.
