Posted by OFX
USD – United States Dollar
The U.S. House of Representatives today is set to pass the $2 trillion stimulus package and get funds to newly unemployed individuals and corporations under financial stress due to COVID-19. The stimulus bill is aimed at supporting financial markets and the domestic economy. The stimulus bill will be sent to the White House later today for President Donald Trump’s signature. Equity markets in the U.S. have halted their three-day win streak today as the U.S. has quickly become the global leader of COVID-19 case. The U.S. now has more confirmed cases of coronavirus than any other country, with more than 85,500 positive tests.
According to the latest figures collated by Johns Hopkins University, the U.S. has overtaken China (81,782 cases) and Italy (80,589).
But with almost 1,300 COVID-19-related fatalities, the U.S. death toll lags behind China (3,291) and Italy (8,215). But as mentioned yesterday, cases are doubling roughly every two days in New York alone.
The U.S. dollar retreated for a third consecutive session yesterday as risk sentiment continued to improve, and markets look to correct as the USD overshoot. With liquidity pressures easing, investors are unwinding USD shorts forcing the greenback lower against most major counterparts. While markets are mainly ignoring dire macroeconomic indicators, yesterday’s U.S. jobless claims were keenly anticipated as a marker that could drive further stimulus measures. U.S. unemployment filings rose at an unprecedented pace with more than 3 million Americans registering for unemployment, prompting investors to begin pricing in need for additional fiscal support. With the U.S. now surpassing China with the most significant number of COVID-19 cases worldwide, there are fears the angst across the country and economy extend well into the second half of 2020.
The Bank of Canada cut its overnight lending rate by 0.50 percent to 0.25 percent today. The Central Bank stated the cut would support the Canadian financial system, and add a needed boost to the economy. The BOC also introduces a commercial paper purchasing program as well as buy a minimum of $5B in government securities per week. Governor Poloz said that the Bank is not contemplating negative rates but is ready to take further action if and when required. The loonie fell against all its G10 counterparts at the announcement. The Canadian dollar has been one of the worst-performing currencies this year. A collapse in oil prices is due to a downturn in global demand, an oil price war that does not generate any headlines due to COVID-19 being the world’s biggest concern. WTI Crude Oil trades at 21.76 per barrel this morning down another 3.58 percent. American oil production sites are shutting down, and industry participants are expecting the biggest idling of wells in 35 years. As the Canadian is mostly an export-oriented economy market participants, do expect the slump in loonie pricing to continue into the coming quarter.
The euro jumped over 1 percent, pushing through 1.10 while the dollar slipped back below 110 Japanese yen. The Great British pound continued its recovery rallying nearly 2.55 and back through 1.20, touching 1.2174 while the Canadian dollar pushed back through 0.70 U.S. cents.
While attentions remain squarely affixed to the unfolding coronavirus pandemic, there is scope for further U.S. softness as risk appetite improves. However, we expect the USD to continue mostly well bided as the pall of uncertainty cast by COVID-19 and month /quarter-end rebalancing drive demand for the world’s base currency.
EUR/USD: 1.0953 – 1.1086 ▼
GBP/USD: 1.2144 -1.2323 ▲
USD/CAD: 1.3989 – 1.4154 ▲
AUD/USD: 0.6022 – 0.6126 ▼
NZD/USD: 0.5909 – 0.6015 ▼
Posted by OFX