The US dollar and Japanese yen gain as economic data for March shows drastic impact of isolation measures

The US dollar gained as global investors began to turn attention away from massive government stimulus efforts towards the reality of the impact on economies. The question of “is it enough” regarding government efforts to re-boot economies and maintain basic functioning financial markets will remain unanswered for at least the month of April. In the meantime, investors will continue to flock to the safe-havens they know – US Treasuries and the US dollar.

“Experience is the teacher of all things”

Julius Caesar
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    April 1, 2020

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  • USD

    The dollar gained vs. most every currency as risk-aversion returned in force due to weak economic numbers that indicate the depth of the coming global recession. US private payroll numbers for March came in at -15,000 which was better than expected. But most economists consider the March numbers to be prior to the bulk of the coronavirus impact.
    US manufacturing data for March is due out later this morning.


    Manufacturing data for March did not fall as far as expected helping the pound buck the strong dollar trend. GBP continues to hover around the 1.24 level for a third day. A number of major banks announced they were scrapping planned dividends and buybacks in response to calls from the UK regulator amid the recent market turmoil. The news drove equity prices in the UK and Europe down 3%.


    The euro weakened for a third day and has fallen 2% vs. the US dollar over that time. Financial markets are being hit with the reality of the economic collapse caused by isolation measures around the world. New car registrations fell 70% for March in Spain and France indicating the magnitude of economic disruption. Manufacturing and new orders data in Germany, France and Spain fell to the lowest levels in 11 years and are expected to fall much further in April.


    The Canadian dollar weakened on overall US dollar strength and expectations the manufacturing data out of Canada later this morning will show weakness.  The oil price stabilized as traders awaited efforts by the US government and others to support the oil price with strategic buying. Russia said they would not raise production.


    The Japanese yen is poised to strengthen as it tests the 107.30 level vs. the US dollar. The yen is one of the few currencies gaining vs. the dollar this morning.

    The Chinese renminbi lost ground to the dollar as it continues a slow rise which could eventually test the 7.20 resistance level. Manufacturing data in Asia was weak for March after February's drop. The exception has been China's manufacturing data which showed growth.

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Peter Compton
Peter Compton

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