Daily Market Pulse

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Awaiting Consumer Confidence report

USD

Markets continue to react to the worldwide Coronavirus pandemic. US equity markets had a positive move yesterday and Asian and European equity markets were mostly positive ahead of this morning’s North American trading day. Analysts still await US economic news to be released later in the week to get an idea of how this pandemic has affected the US economy. The USD is higher against the EUR and CAD and pretty much unchanged against the JPY and GBP. US Treasury yields are slightly higher this morning, with the 10-year note trading at 0.6774%, while the 30-year bond was trading at 1.2972%. The US death toll due to the virus has gone above 3,000 and over 164,000 cases have been confirmed. US Consumer Confidence number is due out at 10:00 am EST, and the anticipated number is 112, after a 130.7 number last year, but this number could be even lower.

EUR

EUR/USD is trading near their overnight lows, as the virus continues to spread through Europe. Eurozone inflation numbers are due out today. Technical rejection of resistance numbers points towards the EUR trading lower over the next few trading sessions. As we end the first quarter of 2020, there is a possibility to see some EUR buying as money managers adjust their positions. However, if these trades have already been made, the pressure may be back on the single currency. The outbreak in Europe has centered largely in Italy and Spain and the news there is promising. The number of patients being treated in Spain has stabilized, and new cases in Italy have dropped quite a bit. Expect the pressure to remain on the EUR today.

GBP

GBP/USD is trading off its overnight highs the first quarter of 2020 comes to an end today. UK GDP was reported as flat in the fourth quarter of 2019 and the budget deficit was reported to be lower than expected. Longer-term, the pound could come under pressure due to the rating downgrade from yesterday. There are concerns among analysts that a weakening of public finances in the UK due to the fight of the Coronavirus and uncertainty now over the post-Brexit trade relationship with the EU. These situations will weigh on the GBP moving forward. Brexit talks have been suspended due to the virus outbreak and there is no date set for negotiations to resume. Short-term could see a move lower in the GBP.

JPY

USD/JPY is trading mid-range as the US markets prepare to open. Virus cases in Japan are expected to exceed 2,000 this week. According to Japanese officials, there is no need at the present to declare a state of emergency. Officials warned that a lockdown of cities such as Tokyo and Osaka would have a “huge” impact on the Japanese economy. Japanese officials have warned their citizens not to travel overseas, and “Level 3” travel warnings were issued for the US, Canada, China, South Korea, and the UK, along with several European countries. It is expected that Japan will likely ban non-Japanese nationals form entering the country. Economic numbers released overnight had very little effect on the currency, as retail sales for February were higher at 1.7%, year-on-year after January posted a -0.4% year-on-year number.

CAD

USD/CAD moved higher overnight, despite oil recovering from 17-year lows reached in yesterday’s trade. Failure to hold the technical resistance line overnight has USD/CAD trading at overnight highs, and the move is expected to continue in trading today. An agreement between the US and Russia to discuss stabilizing the energy markets helped oil prices but did not help the loonie. Brent crude was up $0.61 at $23.37 per barrel, while U.S. crude was higher at $21.13 per barrel, up $1.04. While the discussion between the two powers would seem to be positive, speculators expect that oil prices will remain pressured in the near term.

CNY

China had a strong rebound in PMIs overnight as the numbers moved back into expansion but analysts said they needed more information to confirm any reversal. China’s PMI manufacturing number rose to 52.0 in March up from 35.7 the previous month, while non-manufacturing also rose to 52.3 in March up from 29.6. According to Chinese news agencies, as of March 35th, the resumption rate of large and medium-sized enterprises was at 96.6%, an increase of 17.7% from last month. A statement from Chinese officials also said that they cannot say the economy has fully recovered based on a single month and that they will continue to monitor the numbers.

Quick Insights

USD: Traders await Consumer Confidence number.

USD: Traders await Consumer Confidence number.

EUR: EUR trading off overnight highs.

EUR: EUR trading off overnight highs.

GBP: GBP pressured as GDP numbers are disappointing.

GBP: GBP pressured as GDP numbers are disappointing.

JPY: Japanese retail sales rose, as government ponders travels restrictions.

JPY: Japanese retail sales rose, as government ponders travels restrictions.

CAD: Higher oil prices fail to move loonie higher.

CAD: Higher oil prices fail to move loonie higher.

CNY: PMI release shows strong rebound back into expansion area.

CNY: PMI release shows strong rebound back into expansion area.

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