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News

In his Coronavirus Task Force Briefings, US President Donald Trump praises the new tests to find the cure of the pandemic while also assuring to get F

In his Coronavirus Task Force Briefings, US President Donald Trump praises the new tests to find the cure of the pandemic while also assuring to get FDA approval on sterilized medical masks.

Key quotes

We've been doing more tests than any other country anywhere in the world. It's one of the reasons that we have more cases.

More hospitals, like the one in the Javitz center, are coming to New Jersey and New Orleans.

Companies can send employees to retaurants will get a tax break to help struggling retaurants.

The highest point in death rates from coronavirus is likely to hit in two weeks.

Will be extending social distancing guidelines until April 30.

Hydroxychloroquine is now being administered to 1100 people along w a ZPAC in NY.

It’s only been two days; previously, officials said those trials began earlier last week.

Friday, FDA authorized new test that delivers "lighting fast" results in as little as 5 min.

Working to speed up FDA approval on sterilizing medical masks for reuse.

Healthcare workers have said they have had to reuse masks while treating coronavirus patients and have said that’s dangerous.

FX implications

Given the early Monday morning in Asia, the market’s reaction to the news remains mostly muted. However, the broad risk-off is likely to prevail unless any news of a cure rolls out. Even so, the US dollar might have to remain under pressure, despite its safe-haven status, amid pandemic worries in the world’s largest economy.

While extending its late-Friday pullback from the two-week top, AUD/USD slips below 0.6150 at the start of the week?s Asian trading session on Monday.
  • AUD/USD fails to hold onto the previous recovery gains.
  • Aussie PM signaled more measures, Treasurer announced changes to foreign investment review framework.
  • Coronavirus continues to take its toll on the global economies, the US and the UK are in the spotlight off-late.
  • A light economic calendar will keep virus headlines, stimulus on the driver’s seat.

While extending its late-Friday pullback from the two-week top, AUD/USD slips below 0.6150 at the start of the week’s Asian trading session on Monday. While the recent greenback weakness pleased the Aussie pair buyers off-late, the broad risk-off seems recently weighing on the quote.

The US takes bold measures to combat the pandemic but not winning so far…

Be it multiple rate cuts or trillions of dollars worth of Quantitative Easing (QE) and other measures, the US policymakers don’t refrain from any bold steps to counter against the coronavirus (COVID-19). The latest measures were $2.2 trillion that got approval from the House of Representatives on Friday to reach President Donald Trump’s table for being the law.

US Trump also continues to perform in full steam mode while targeting to overcome the pandemic as soon as possible. In a move to do so, the Republican leader recently turned down quarantine for the hot-spots, namely New York, New Jersey and Connecticut, while urging residents to refrain from non-essential domestic travel for two weeks. It was also reported that the President doubts the recent forecasts from that suggest an increase in coronavirus-led fatalities.

Even so, members of his Coronavirus Task Force, namely Anthony S. Fauci and Deborah Birx, anticipate a huge rise in the days to come before the dust settles.

While marking the current status of the epidemic, it can be known that the US has more than 2,200 coronavirus-related deaths and 130,000 confirmed cases.

On the economic front, the spike in the US jobless claims and the drop in the Michigan Consumer Confidence was the latest areas of concern with the Dallas Fed President Robert Kaplan signaling further advances in the unemployment rate in the low to mid-teens.

The Aussie policymakers are also on the move…

Alike their US counterparts, Scott Morrison and the company also fight with the full strength. The Aussie PM recently mentioned to media that the government will provide further income support and the next assistance package will be bigger than what has been seen so far.

Further, the Australian Treasurer, Joshua Anthony Frydenberg, has announced changes to Australia’s foreign investment review framework, effective from 10.30 pm AEST on Sunday 29 March 2020, relating to monetary thresholds and timeframes for reviewing applications.

Amid all these plays, the market’s risk-tone remains under pressure with the US 10-year treasury yields losing 13 basis points (bps) to 0.68% and Wall Street marking losses by the end of their active session on Friday.

Considering the lack of major data/events on the economic calendar, markets will keep eyes on the virus/stimulus news for fresh impulse.

Technical analysis

21-day SMA near 0.6200 is still pending for a break until then risks of the pair’s pullback moves to 0.6000 marks comprising 10-day SMA can’t be ruled out.

 

Australian Treasurer, Joshua Anthony Frydenberg, has announced changes to Australia?s foreign investment review framework, effective from 10.30pm AEST

Australian Treasurer, Joshua Anthony Frydenberg, has announced changes to Australia’s foreign investment review framework, effective from 10.30pm AEST on Sunday 29 March 2020, relating to monetary thresholds and timeframes for reviewing applications.

Australian Government Foreign Investment Review Board

Material on the FIRB website is being updated to capture these changes. In the meantime, all material on this website, including guidance notes, should be read in light of the Treasurer’s announcement.

The Treasurer has today announced temporary changes to the foreign investment review framework. The Foreign Investment Review Board (FIRB) was consulted upon and fully supports the changes.

These temporary measures have been necessitated by extraordinary economic circumstances. Foreign investment is and will continue to be critical to Australia’s prosperity. These temporary measures are necessary to protect the national interest during an historically challenging time for the economy, businesses and the broader community.

The FIRB will continue to assess foreign investment applications against the national interest (including support for employment) on a case by case basis. It will seek to accommodate commercial deadlines wherever possible. The FIRB will continue to be supported by the resources of the Treasury and the Australian Taxation Office.

Market implications

The stimulus is what markets are breathing with these days, the more the better. 

 

Reuters reports that "the Reserve Bank of New Zealand (RBNZ) said on Monday that it was deploying more tools to provide additional liquidity to the co

Reuters reports that "the Reserve Bank of New Zealand (RBNZ) said on Monday that it was deploying more tools to provide additional liquidity to the corporate sector and support market functioning to offset the impact of the coronavirus."

Reuters explains that a new weekly "Open Market Operation (OMO) will provide liquidity in exchange for eligible corporate and asset-backed securities",  quoting the RBNZ which explained this in a statement.

"The OMO will be held each Tuesday and will offer up to NZ$500 million ($300 million) for terms out to approximately three months, it said. The first operation will be held on March 31. The bank also said it will offer to purchase government bonds maturing on May 15, 2021, for liquidity management purposes. The offer opens on March 31," Reuters reported. 

Key notes

  • Reserve Bank of New Zealand says will provide liquidity in exchange for eligible corporate and asset-backed securities.
  • Reserve Bank of New Zealand says objective is to encourage banks to continue to fund their corporate clients by purchasing their debt securities.
  • RBNZ says to hold OMO each Tuesday, where corporate & asset-backed eligible securities will be acceptable as collateral on two name basis.
  • RBNZ says reserve bank continues to monitor market developments very closely, and stands ready to act further.
  • Says corporate OMO seen as temporary, to support market functioning.
  • Says offering to purchase NZ govt bonds maturing 15 may 2021 for liquidity management purposes.
  • Says OMO to be held at 11:00 am local time each Tuesday & to typically offer up to $500 mln dollars for terms out to about 3 months.
  • Says first corporate OMO operation to be held on March 31.
  • Says reserve bank will review operation in 12 months’ time or sooner if demand diminishes.

Market implications

The NZD is set to open lower according to the pre-open market dollar rates which have otherwise enjoyed a wave of buying since bottoming in the 18th March in the 0.5470s reaching as highs as 0.6068, Friday's high. With market's fixated on COVID-19, New Zealand has reported its first coronavirus-related death, a woman in her 70s on the west coast of South Island, which may not go down well for NZD bulls as New Zealand health officials confirm 63 new cases on Sunday. 

 

Reuters reports "that Saudi Arabia said its air defences intercepted two ballistic missiles on Saturday night in an attack that Yemen?s Iran-aligned H

Reuters reports "that Saudi Arabia said its air defences intercepted two ballistic missiles on Saturday night in an attack that Yemen’s Iran-aligned Houthi group on Sunday said they had launched towards the capital Riyadh and southern areas near the Yemeni border."

Key notes

  • No fatalities had been recorded from the shrapnel that fell on Riyadh.
  • Residents in Riyadh reported multiple blasts around 2320 (2020 GMT), followed by emergency vehicle sirens in some northern districts.
  • The attacks come days after Yemen’s warring parties had welcomed a UN call for an immediate truce on Thursday to fight the coronavirus outbreak.
  • “Two civilians were slightly injured due to the falling of the intercepted missile’s debris as it exploded in mid-air over residential districts,” in Riyadh, the Saudi state news agency (SPA) reported, citing a Saudi civil defense spokesman, Lt. Colonel Mohammed al-Hammadi.
  • Saudi Arabia blamed Iran for a September 2019 drone and missile attack on two oil installations that initially halved Saudi oil output, even after the Houthis claimed responsibility. Tehran denies involvement.
  • The Saudi-led coalition on Friday said it had also intercepted and destroyed drones launched by the Houthis towards the Saudi cities of Abha and Khamis Mushait.
  • A military spokesman for Yemen’s Houthis on Sunday said the group’s forces had launched rockets and drones at “sensitive” sites in the Saudi capital Riyadh and at economic and military sites in Jazan, Najran and Asir, near the Yemeni border.

Market implications

The sounds of war in the Middle East are usually a bullish factor for oil prices. However, considering the global economy is locked down due to COVID-19, "we caution that storm clouds still loom on the horizon, as the latest DOE inventory statistics showed dismal product demand," analysts at TD Securities explained.  

 

 

 

An unknown projectile was fired toward the Sea of Japan, South Korea’s Yonhap news agency said citing a statement from the Joint Chiefs of Staff. "Nor

An unknown projectile was fired toward the Sea of Japan, South Korea’s Yonhap news agency said citing a statement from the Joint Chiefs of Staff.

"North Korea carried out a launch of an unknown projectile toward the Sea of Japan," the agency quoted the statement as saying.

No information about the type of the projectile is available so far. This was the fourth launch of this kind since the beginning of 2020. In December last year, North Korean leader Kim Jong-un announced that his country would soon roll out new strategic weaponry.

On March 21, Yonhap reported that North Korea had fired two short-range ballistic missiles on from its North Pyongan Province toward the Sea of Japan. According to North Korea’s news agency KCNA, the country’s leader Kim Jong-un also led long-range artillery exercises on March 2 and 9.

Market implications

This was the latest in an unprecedented flurry of launches that South Korea decried as "inappropriate" amid the global coronavirus pandemic, and is bound to stir up controversy between world leaders, although will have little bearing on markets immediately which are concentrated on the spread of COVID-19 and how the world economy is faring. 

The coronavirus, COVID-19, is decimating the US as the US President, Donald Trump remains determined to get the country back to work, "pretty quickly"

The coronavirus, COVID-19, is decimating the US as the US President, Donald Trump remains determined to get the country back to work, "pretty quickly". The president does not believe the numbers being projected are accurate, however, his own Task Force team member Anthony S. Fauci said Sunday that the nation could record 100,000 to 200,000 deaths and millions of infections, according to evolving projections.

Deborah Birx, another member of the task force offered a similarly grim assessment: “No state, no metro area, will be spared.” As it stands, there are more than 2,200 coronavirus-related deaths and 130,000 confirmed cases in the United States.

In other news, Chinese scientists have developed a new weapon to combat the COVID-19, according to the Global Times. "They say they have found a nanomaterial that can absorb and deactivate the virus with 96.5-99.9% efficiency."

As for news from around the world here are some significant developments, selected from the Washington Post:

  • Britain could take six months or more to return to “normal,” a health official said.
  • Italy reported a slight decline in deaths on Sunday, with 756 dead in the past 24 hours, raising the country’s total to 10,799. There are more than 32,000 covid-related fatalities worldwide.
  • War-ravaged Syria reported its first death from the coronavirus, a woman who died as soon as she arrived in an ambulance at a hospital in an unspecified location, according to the Syrian state news agency SANA.
  • Washington state Gov. Jay Inslee (D) said Sunday that he would not lift his statewide stay-at-home order if Trump enacts his plan to categorize places by risk levels for covid-19, the disease caused by the novel coronavirus.
  • In Russia’s most restrictive coronavirus-related measure yet, Moscow will enact a citywide quarantine starting Monday, Mayor Sergei Sobyanin announced. The stay-at-home order for all residents comes as the Russian capital’s confirmed novel coronavirus cases surpassed 1,000 over the weekend — roughly two-thirds of the country’s total. Eight people have died.

  • Japan is seeing a sudden acceleration in coronavirus cases, while President Hassan Rouhani warned his fellow Iranians that the novel coronavirus could linger in their country for up to two years.
  • Prime Minister Narendra Modi apologized for the handling of the lockdown in India.

Market implications

This is an economic tsunami yet stock markets, are so far, holding within correction territory while the outlooks from the US president and China are more optimistic than most. The S&P 500 was ending down by over 3% on Friday but held in a significant support structure as Trump looks to ease nationwide guidelines in the pursuit of a stronger economy, China appears to have successfully dampened the rate of new infections in Wuhan.

Meanwhile, the government of Hubei, the province that is home to Wuhan is removing travel restrictions and will allow residents, except those in Wuhan, to again move freely. Moreover,  places like Shenzhen, which is the manufacturing hub in the south, and Hangzhou, a tech hot spot on the east coast, residents are reporting that the restaurants and malls are starting to refill. Markets are forward looking and are pricing in such headlines. 

 

 

Indeed, Italy now has the second-highest number of confirmed cases in the world after the United States (105,470). Total cases are 92,472 confirmed, m
  • Italy now has the second-highest number of confirmed cases, death rate soars. 
  • Italy enters its sixth week of restrictions.
  • Why is the rate of death is so high in Italy?

Indeed, Italy now has the second-highest number of confirmed cases in the world after the United States (105,470). Total cases are 92,472 confirmed, marking up the highest death rate in the world. China is not far behind, the prior epicentre of the pandemic, which has a roughly similar number of confirmed cases at 81,997. However, the rate of death is Italy far surpasses China which is now 3,299, according to Johns Hopkins University and Medicine.

As Italy enters its sixth week of restrictions, the nations death toll is now the highest in the world at 10,023 and the fatalities this weekend are grim with numbers now increasing by 889 since the last figures were released on Friday, according to Italy's Civil Protection Agency.

The world is asking why the rate of death is so high in Italy, but it perhaps comes down to the nations large elderly population which is potentially more susceptible to the virus, and the method of testing that's not giving the full picture about infections. 

On Saturday, the Italian Prime Minister Giuseppe Conte said he had approved a new package of measures to help those worst hit by the coronavirus emergency, including supplying shopping vouchers and food packages.

Announcing in a news conference, Conte said that there would be 4.3 billion euros ($4.79 billion) made immediately available to mayors to deal with theirs citizens' needs and another 400 million would be provided in a special fund for "people who don't have the money to do their shopping." The aid was announced after the nation already approved a 25 billion euro stimulus package earlier this month and has promised another one of at least the same size in April.

Market implications

Markets are paying close attention to the levels of debt in the eurozone, zombie banks and a world pandemic which has forced the prospects of a global recession which could spark a financial crisis in the system, layered by corporate dent risks. 

Economy Minister Roberto Gualtieri, speaking at the same news conference, criticized the president of the European Commission, Ursula von der Leyen, for appearing to dismiss the need for issuance of common debt by European Union countries.

"The commission president's words were a mistake and I regret that she made them," he said, adding that Europe would need "a great Marshall Plan" to relaunch its economy after the coronavirus emergency is over.

EUR/USD update

EUR/USD Forecast: Further gains likely once above 1.1165

Here is what you need to know on Monday, March 30th: The coronavirus pandemic keeps taking its toll on the world?s economies. As one-third of the glob

Here is what you need to know on Monday, March 30th:

  • The coronavirus pandemic keeps taking its toll on the world’s economies. As one-third of the global population is in lockdown, most of them, extending measures until mid-April. US President Trump finally decided not to put US “hot spots” on quarantine, but instead issued a travel advisory urging New York, New Jersey and Connecticut residents to refrain from non-essential domestic travel for two weeks. Meanwhile, the number of COVID-19 cases in the US has surpassed 124,000.
  • The American dollar plummeted Friday alongside Wall Street and government bond yields, without a particular catalyst. However, the expansion of the outbreak in the world’s largest economy is among the reasons.
  • European and commodity-linked currencies soared to weekly highs, but because of the dollar’s weakness. There are no real reasons for those to appreciate, and the next directional moves will continue to depend on the greenback strength or weakness.
  • The Japanese yen appreciated although gold consolidated, this last, finishing the week at around $1,625 a troy ounce.
  • Crude oil prices bounced modestly ahead of the close but settled near the multi-year lows achieved this month.
  • Worrisome news over the weekend showed that, in separated events, missiles had been shoot. Saudi Arabia reported ballistic missiles were intercepted on Saturday in the sky above Saudi Arabia’s capital Riyadh and the southern city of Jazan. Also, North Korea launched short-range ballistic missiles into the ocean off its east coast on Sunday.
  • Bitcoin and Ethereum struggle to find a direction; Ripple stays positive
Gold has closed the last full week of a turbulent March around $1,626. How is it positioned as further coronavirus news is set to rock markets in a ne

Gold has closed the last full week of a turbulent March around $1,626. How is it positioned as further coronavirus news is set to rock markets in a new week?  

The Technical Confluences Indicator is showing that significant support awaits at $1,625, which is the convergence of the Simple Moving Average 10-4h, the SMA 100-15m, the Bollinger Band 15min-Middle, the SMA 5-1h, and the Fibonacci 61.8% one-day.

The next cushion is at $1,619, which is the meeting point of the Fibonacci 23.6% one-day and the BB 1h-Lower.

Further down, $1,607 is the strongest support line. It is the confluence of the Fibonacci 23.6% one-week and the Pivot Point one-week one-day Support 2. 

Looking up, $1,635 is the key resistance line. It is a juncture of lines including the BB 4h-Upper, the Fibonacci 61.8% one-week, the PP one-day R1. 

The upside target is $1,645, which is where the previous week's high hits the price.

Here is how it looks on the tool:

Gold Technical Confluence March 30 2020

Confluence Detector

The Confluence Detector finds exciting opportunities using Technical Confluences. The TC is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. Knowing where these congestion points are located is very useful for the trader, and can be used as a basis for different strategies.

This tool assigns a certain amount of “weight” to each indicator, and this “weight” can influence adjacents price levels. These weightings mean that one price level without any indicator or moving average but under the influence of two “strongly weighted” levels accumulate more resistance than their neighbors. In these cases, the tool signals resistance in apparently empty areas.

Learn more about Technical Confluence

US Dollar Index Price Analysis: DXY records its largest weekly decline since 1986
  • US dollar index (DXY) broke below the 99.00 figure and the 100/200 SMA on the four-hour chart. 
  • The level to beat for bears is the 98.00 support. 
 

DXY weekly chart chart

 
DXY had its worst weekly decline since April 1986 as the bearish pressure has been relentless throughout the week. 
 

DXY daily chart

 
The greenback is nearing its daily 100 and 200 SMAs near the 98.00 figure. It is likely that next week DXY will challenge the above-mentioned level. 
 

DXY four-hour chart

 
After an attempted bounce near the 99.00 figure near the 100/200 SMAs on the four chart, DXY broke below and reached a low of 98.25 this Friday. As the bears are in control, DXY is set to extend losses towards the 98.00, 97.00 and 96.60 levels in the medium term.
 

Additional key levels

 

Colombia Interest rate came in at 3.75%, below expectations (4.25%)
European Monetary Union CFTC EUR NC Net Positions increased to ?61.3K from previous ?32.5K
United States CFTC Gold NC Net Positions up to $288.4K from previous $281.9K
United States CFTC Oil NC Net Positions down to 436K from previous 440.2K
Australia CFTC AUD NC Net Positions rose from previous $-28.7K to $-25.2K
United States CFTC USD NC Net Positions declined to $12.7K from previous $17K
Japan CFTC JPY NC Net Positions fell from previous ¥32.9K to ¥23.9K
European Monetary Union CFTC EUR NC Net Positions: ?288.4K vs ?32.5K
United Kingdom CFTC GBP NC Net Positions dipped from previous £18.6K to £10.9K
According to analysts from Rabobank, the big question regarding the oil market is whether the Saudis will follow through on this threat to flood marke

According to analysts from Rabobank,  the big question regarding the oil market is whether the Saudis will follow through on this threat to flood markets given their objectives have largely been met already.

Key Quotes: 

“Looking forward we expect the oil market to remain under pressure in most scenarios given the historic demand destruction taking place, however, we also expect supply-side developments will have a meaningful impact on the price formation in the weeks ahead. We see prices following two very different trajectories depending on how the current price war plays out. To that end, we will be closely monitoring Saudi crude oil production and exports as we approach the April deadline for the huge supply increase.”

“Our base case is for the price war to end in the not too distant future given the political pressure that is building on Saudi Arabia and the poor optics of destabilizing markets during a period of global pandemic. If the price war persists though, then the price outlook is far worse and all bets are off as to how low crude oil can go.”
 

Josh Nye, Senior Economist at RBC, explains they see more upside coming in USD/CAD but not record highs. They forecast USD/CAD will trade at 1.46 (68.

Josh Nye, Senior Economist at RBC, explains they see more upside coming in USD/CAD but not record highs. They forecast USD/CAD will trade at 1.46 (68.5 in US cents) during the second quarter and at 1.43 (69.9) in the third. 

Key Quotes: 

“Canada’s currency was worth 77 US cents at the start of the year but lost 10% of its value in recent weeks, dropping to a four year low of just 69 cents before recovering slightly in the past few days. Broad strengthening in the US dollar has been a factor—the greenback was at times up more than 9% against all currencies (on a trade-weighted basis) and about 7.5% higher compared with advanced economies. Among the latter, Canada is joined by other commodity producers (Australia, Norway) and countries launching new quantitative easing programs (New Zealand, Australia again) in seeing double-digit declines in their currencies.”

“That the Canadian dollar has weakened in an environment of significant risk aversion, collapsing energy prices, and general demand for US dollars is unsurprising. Given continued uncertainty over the depth and duration of coronavirus containment measures, it’s too early to say whether risk appetite or oil prices have hit bottom. New easing announced by the Bank of Canada—it cut the overnight rate to its effective lower bound and launched its first QE program on March 27—could also send the currency lower as markets continue to digest those moves. But we don’t think the Canadian dollar is headed for its all-time low of 62 US cents seen in the early-2000s.”

“The Canadian dollar’s darkest days have come amid periods of financial market volatility, from the 1998 Russian financial crisis and LTCM collapse to the dot-com bust in the early-2000s. The same dynamic is at play now as investors grapple with an unprecedented, sharp downturn in global economic activity. The Canadian dollar’s stronger relationship with oil prices (compared with decades ago) isn’t helping. But a healthier fiscal position and less reliance on external borrowing should provide a backstop. 69 cents (CAD/USD) might not be as bad as it gets, but we doubt 62 cents will come into view.”

EUR/USD is bouncing sharply from the 2020 lows as the spot is on track to have a daily close above the 1.1100 figure and the 200 DMA (daily simple moving avera
  • EUR/USD retracement up challenges the 1.1106 resistance and the 200 SMA on the daily chart.
  • The next levels of resistance are seen near 1.1163 and 1.1240. 
 

EUR/USD daily chart 

 
EUR/USD is bouncing sharply from the 2020 lows as the spot is on track to have a daily close above the 1.1100 figure and the 200 DMA (daily simple moving average). The market retraced up more than 50% of its last decline. 
 

EUR/USD four-hour chart

 
The bullish pressure remains unabated into the end of the week. The spot is looking to break above the 1.1106 resistance en route towards 1.1163 and potentially 1.1240 if the market gathers enough steam. Support is seen near the 1.1065, 1.1014 and 1.0968 price levels, according to the Technical Confluences Indicator.
 
 
Resistance: 1.1106, 1.1163, 1.1240
Support: 1.1065, 1.1014, 1.0968
 
 

Additional key levels

 

Analysts at MUFG Bank, point out that with the Federal Reserve having addressed USD liquidity issues, they see the path opening up for USD/JPY to grin

Analysts at MUFG Bank, point out that with the Federal Reserve having addressed USD liquidity issues, they see the path opening up for USD/JPY to grind back lower over the coming weeks.

Key Quotes:

“The huge demand for US dollars even overwhelmed the usual favoured safe-haven currency, the yen, which resulted in USD/JPY going higher during the extreme risk off period. But we have had evidence this week to suggest this has been addressed. The JPY cross-currency basis has jumped this week from the low-point on 19th March to revert to more normal levels. That followed a USD take-up at the BoJ dollar supplying operation of USD 67.2bn. But we cannot downplay the scale of Fed actions and we believe those actions will play out most clearly in USD/JPY – and hence we see further downside risks for USD/JPY.”

“Cheap hedging costs could see greater hedging by GPIF also while, we would only see notable GPIF support at lower USD/JPY levels. With the Fed having addressed USD liquidity issues, we see the path opening up for USD/JPY to grind back lower over the coming weeks.”

The European Central Bank recommended on Friday that eurozone banks should skip dividend payments and share buybacks at least until October 1st. "The

The European Central Bank recommended on Friday that eurozone banks should skip dividend payments and share buybacks at least until October 1st.

"The ECB considers it appropriate that the significant credit institutions refrain from making dividend distributions and performing share buy-backs aimed at remunerating shareholders during the period of the COVID-19-related economic shock," the official statement read. "The ECB recommends that at least until 1 October 2020 no dividends3 are paid out and no irrevocable commitment to pay out dividends is undertaken by the credit institutions for the financial year 2019 and 2020 and that credit institutions refrain from share buy-backs aimed at remunerating shareholders.

Market reaction

The EUR/USD pair continues to climb higher after this announcement and was last seen trading at 1.1107, adding 0.72% on a daily basis.

The Bank of Canada (BoC) on Friday lowered by 50bps the key interest rate to 0.50%. Analysts at CIBC, point the Canandian economy looks set to sharply

The Bank of Canada (BoC) on Friday lowered by 50bps the key interest rate to 0.50%. Analysts at CIBC, point the Canandian economy looks set to sharply contract in the first half of 2020 and BoC actions will help alleviate some of the pain and will support the recovery, whenever that begins.

Key Quotes: 

“The Bank of Canada joined the string of central banks throwing the kitchen sink at the economic downturn. In a move we've been expecting, the Bank of Canada cut rates another 50bps, bringing the target for the overnight rate down to 0.25%. In the accompanying statement, the Bank noted that this was the effective lower bound, so further rate reductions to 0% or into negative territory seem ruled out.”

“There is ample room for the asset purchases to grow even larger or become more focused on a particular part of the yield curve to depress rates. The asset purchases  should engender a hunt for yield that could support longer-end private assets, but at some point credit easing could also become more targeted if that spillover doesn’t transpire."

“In the words of Governor Poloz, ‘A firefighter has never been criticized for using too much water.’ It’s clear then that Governor Poloz is signaling a willingness to be aggressive in battling the shock, a sharp change from a central bank that had previously been hesitant to stoke the fires of household debt accumulation with potentially unnecessary rate cuts."

“The economy looks set to sharply contract in the first half of 2020. Indeed, skyrocketing applications for employment insurance have been a sneak peek into the kind of pain currently being felt.”

EUR/JPY is easing from March?s highs while rebounding from the 119.00 figure and settling near the 200 SMAs.
  • EUR/JPY is back into familiar territories after dropping from the 121.00 figure.
  • EUR/JPY is about to challenge the 120.00 figure. 
 

EUR/JPY daily chart

 
EUR/JPY is easing from March’s highs while rebounding from the 119.00 figure and settling near the 200 SMAs. 
 

EUR/JPY four-hour chart

 
Euro/Yen exchange rate is consolidating losses below the 120.00 figure and above the main SMAs on the four-hour chart. The market is challenging the 119.90 resistance as the spot can have a retest of the 120.50 and 121.00 price levels. Support is seen near the 119.50, 118.75 and 118.00 levels.
 
 

Additional key levels

 

The US House of Representatives approved the coronavirus stimulus package worth $2.2 trillion on Friday. The bill is now sent to US President Donald T

The US House of Representatives approved the coronavirus stimulus package worth $2.2 trillion on Friday. The bill is now sent to US President Donald Trump for signing.

Earlier in the day, markets were concerned about the bill's passage after Republican lawmaker Thomas Massie voiced his opposition against it.

Market reaction

Wall Street's main indexes recovered modestly but remain on track to post large daily losses after closing the previous three days with strong gains. As of writing, the Dow Jones Industrial Average was down 2.4% on the day while the S&P 500 and the Nasdaq Composite were both erasing 2.1%.

The USD/CHF pair is falling for the fourth consecutive day amid an ongoing sell-off of the US dollar. The DXY approached earlier on Friday the 100.00
  • US Dollar Index tumbles to fresh weekly lows at 98.73, down 4% from the top. 
  • US data: Consumer Sentiment Index suffers second-largest monthly decline in March.

The USD/CHF pair is falling for the fourth consecutive day amid an ongoing sell-off of the US dollar. The DXY approached earlier on Friday the 100.00 area and recently bottomed at 98.73, the lowest level since March 17. 

The US dollar remains under pressure, affected by lower US yields. After a short-lived recovery, the greenback resumed the decline. USD/CHF rose to 0.9655 and reversed. The slide gained speed after falling below 0.9585. 

Recently the pair bottomed at 0.9545, the lowest in ten days. It is hovering near the lows, consolidating a weekly loss of 300 pips. Despite rising against the US dollar, the Swiss franc fell against its main European rivals, on the back of the recovery in equity markets. 

Wall Street is down on Friday, but still to recent gains. Regarding data, the key report on Friday, was the University of Michigan Consumer Sentiment index that showed a drop to 89.1 in March's final reading from 101 in February, the worst decline since the 2008 financial crisis. 

USD/CHF Technical outlook

The recent decline pushed the price below key moving averages in the daily chart, showing the negative bias might prevail. However, volatility continues to be the critical factor. A recovery back above 0.9660/70 (20 and 55-day moving average) would remove the bearish bias.

 

 

The USD/CAD pair rose to a daily high of 1.4153 following the Bank of Canada's (BoC) surprise rate cut announcement in the early trading hours of the
  • Bank of Canada lowered its policy rate by 50 basis points to 0.25%.
  • US Dollar Index looks to end week below 99 handle.
  • USD/CAD remains on track to snap four-week winning streak.

The USD/CAD pair rose to a daily high of 1.4153 following the Bank of Canada's (BoC) surprise rate cut announcement in the early trading hours of the American session. However, with the USD selloff picking up steam in the last hours, the USD/CAD pair erased the majority of its daily gains and was last seen trading at 1.4040, adding 0.15% on the day.

BoC cuts policy rate for third time in March

The BoC lowered its policy rate by 50 basis points to 0.25% on Friday. "The rate cut is intended to provide support to the Canadian financial system and the economy during the COVID-19 pandemic," the BoC explained in a statement.

While responding to questions from the press, Governor Poloz reiterated that the Governing Council stands ready to take further actions as required but noted that the current rate was the lower-bound. 

Regarding the details of the BoC's policy measures, “the BoC announced it is officially joining the QE club, as it will purchase at least $5 bln per week in Government of Canada bonds, that equates to about 1% of GDP per month," noted Benjamin Reitzes from BMO Economics. "Furthermore, the Bank is launching a Commercial Paper Purchase Program (CPPP) to support short-term funding markets.” 

On the other hand, the US Dollar Index extended its slide and broke below the 99 handle to cause the pair to pull away from its highs. As of writing, the DXY was down 0.65% on the day and was looking to close the week nearly 3% lower. 

The data from the US on Friday showed that the University of Michigan Consumer Sentiment Index dropped to 89.1 in March's final reading from 101 in February to reflect the negative impact of the coronavirus outbreak on consumer confidence.

Technical levels to watch for

 

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