Daily Market Pulse

USD lower on a quiet Good Friday


The USD is lower this morning in a holiday-thinned Good Friday trading market. Once again US Jobless Claims reached record highs, with 6.6 million Americans filing first-time claims and the Federal Reserve revealing details on their “Main Street” business lending program, kept the pressure on the greenback. Most major world markets are closed today due to the Easter holiday. The US equity markets are closed today but improved on Thursday to end the week on a positive note, having their biggest one week gain since 1974. The positive reaction to the Fed release of details on the stimulus package outweighed the negative reaction to the jobless number. It seems that investors are expecting the rise in unemployment over the next few months as businesses close and workers are furloughed. US CPI due out this morning, and the March number is expected to be 1.6% after the previous month’s release of 2.3%. A thin trading market today could create volatility and keep the pressure on the USD.


EUR/USD trading near overnight highs as USD weakness and a positive outcome from the Eurogroup meeting aid the single currency. EU finance ministers agreed on a EUR 500 billion rescue plan on Thursday for countries that have been hit hard by the Coronavirus epidemic. There were some heated debates during the meetings as the Netherlands originally held up the agreement insisting that countries in need of relief such as Italy meet their economic targets to receive aid, but they finally relented and an agreement occurred which will allow funds to go towards costs related to the virus, which has taken more than 65,000 lives in Europe. The proposal for “Coronabonds” brought up by Italy, Spain, and France was tabled as ministers agreed to continue to discuss this idea. EUR/USD could test technical resistance levels during trading today.


GBP/USD is also higher this morning testing overnight highs. The pound increased overnight after the news was released that PM Boris Johnson had been released from the Intensive Care Unit. According to a press release from the BBC, the PM has been placed in a regular care unit, where he will be closely monitored as he begins the early phase of his recovery. According to Reuters, the virus has taken an additional 881 lives bringing the total to 7,978 deaths. There is new pessimism concerning Brexit as negotiations remain on hold due to the pandemic. A UK newspaper report stated that a delay in Brexit could cost UK taxpayers as much as GBP 26 billion. US CPI data, which may not be good, should keep the GBP bid throughout the day.


USD/JPY is lower as once again traders look towards JPY as a safe-haven alternative to the USD. While the Fed news boosted the US equity markets, it has had a negative USD effect which has aided the JPY. Japanese markets are one of the few that are open on Good Friday and the Nikkei had a positive trading day. The March Producer Price Index (PPI), fell below forecast to -0.9%, month on month and -0.4%, year on year. USD/JPY trading near strong support levels this morning and a thin trading market could see the currency pair test lower levels today.


USD/CAD also trading near lows for the week, despite Canada releasing its worst employment data ever. Business shutdowns and lower oil prices initially caused Canadian dollar selling and the unemployment rate increased to 7.8% in March. However, market sentiment regarding the loonie reversed after OPEC and its allies agreed to a production cut of 10 million barrels per day. Mexico was the only country to not agree and therefore the agreement is conditional on their consent. Oil prices and the Canadian dollar have both been very volatile over the last few trading days and a thin market today shouldn’t change that.


China’s CPI rose 4.3% year on year in March, less than the 4.8% expected and lower than the February number of 5.2%. China CPI was also lower at -1.5% in March, lower than the -1.1% expected and the February number of -0.4%. According to Assistant Commerce Minister Ran, China’s foreign trade faces real challenges moving forward due to the Coronavirus. Many orders have been delayed or canceled due to the virus, hurting many firm’s abilities to get parts from trading partner countries. Continued uncertainty about the virus remains the biggest uncertainty in China’s foreign trade.


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