Speculation of another Fed cut, declining yields and coronavirus put downward pressure on the dollar
March 11, 2020
EUR/USD 1.1336 GBP/USD 1.2918 USD/CAD 1.3749 AUD/USD 0.6513 USD/JPY 104.60 USD/CNH 6.9600 USD/ILS 3.5567 USD/MXN 21.0910 USD/CHF 0.9342 USD/INR 73.64
USDDespite advancing yesterday, the US dollar pared some gains and has returned to the 96.00 level. CPI figures due out today showed YOY inflation figures of 2.3% versus 2.2% expected. The dollar remains under heavy pressure on rising bets of a further rate cut by the Fed, declining yields and the unknown extent of coronavirus impact on the US economy.
In the US Presidential primary, democratic candidate and former VP Joe Biden won several states, almost cinching the nomination for November’s Presidential election.GBPIn support of the economy, the BoE lowered interest rates from 0.75% to 0.25% and announced plans for a new lending scheme and a reduction of the countercyclical capital buffer for commercial banks. Quantitative easing continues to be a vaccine of choice in treating economic fallout of the coronavirus. The UK unveils their first post-Brexit budget today in which major investments are anticipated. The pound was initially supported by the rate cut and further support is expected following the budget release.EUR
ECB President Christine Lagarde gave a strong message to EU leaders yesterday where she encouraged leaders to act sooner rather than later on fiscal policy on coronavirus fallout. The euro gained, paring some losses from yesterday and eyes look to Thursday’s ECB meeting for further direction.CADUSD selling bias leaves USD/CAD depressed today, but downside has been limited as the loonie is undermined by weaker oil prices as a fallout to a flood of supply in the oil markets.ASIA/PACIFIC
The Japanese yen is benefitting from its safe-haven status as renewed coronavirus fears have been bolstering demand for safe-havens. China has reported a slowing in new cases of coronavirus as containment strategies appear to be working.