USD

The USD begins the week once again under pressure, while US equity markets look to rebound after last week’s historic fall. EUR and JPY are both higher against the USD, while the GBP is trading lower against the greenback. The US ISM Manufacturing number for February is due out this morning and it is expected to contract from last month. The expected number is 50.5, down from 50.9. US equity markets are expected to rebound later this morning. Dow Futures are up around 130 points indicating a positive start to trading later this morning. US equity markets fell more than 10% last week, entering correction territory. 

EUR

EUR/USD continues to move higher, currently trading just off overnight highs. The single currency is getting the benefit of recent USD weakness. Traders are reacting to comments from other central banks (Fed, BOJ, BOE) indicating the possibility that they will lower rates sooner rather than later. With the ECB rate at -0.50%, ECB President Lagarde has been reluctant to comment on any immediate action. If that changes, the EUR could react negatively. The Coronavirus has hit Europe, with most cases being reported in Italy, and as the number of cases grows, governments are limiting events and crowd gatherings. This could begin to weigh on the EUR, especially if equity markets begin to rebound as expected. 

GBP

GBP/USD remains under pressure as EU/UK talks are set to begin today. The GBP initially rose after comments from the Fed, but then reversed to move lower after the BOE also pledged to take any steps needed to ensure stability. The GBP rallied a bit after falling to 4 1/2 month lows last Friday. Negotiations between the UK and EU are expected to remain tense as neither side has shown any initial interest in compromise. GBP is currently near overnight lows and as reports from the UK/EU talks hit the newswires, it is expected that GBP moving lower during today’s trading day.  

JPY

USD/JPY had a bit of a rocky ride overnight and is currently trading lower. BOJ Governor Kuroda, issued a statement earlier today warning about the effects of the spread of the virus and the impact on the global economy. He said the BOJ will “monitor developments carefully and strive to stabilize markets. The BOJ will offer sufficient liquidity through market operations and asset purchases”.  Japan Manufacturing PMI release came in at 47.8 in February, down from 48.8 in January. Traders continue to look at the JPY as a safe-haven alternative.

CAD

The Canadian dollar came off overnight lows as oil prices improved as there are expectations that there will be a larger than expected cut in output from OPEC countries. Adding to the move were comments from central banks regarding stimulus to combat the Coronavirus. Brent crude was up $1.64 to $51.31, while West Texas crude rose to $46.11 after initially falling to a 14-month low at $43.32. As a commodity currency, the loonie will continue to track movements in oil.  

CNY

The Coronavirus continues to spread throughout the world as reported cases increase outside of China, with South Korea, Italy and Iran report cases rising. The US also reported its first death as well as the first reported case in NYC. As virus cases increase throughout the world, traders look towards economic releases in China and these were quite disappointing. China’s Caixin PMI Manufacturing number fell to 40.5 in February from 51.1 in January, much lower than the expected number of 45.7. This is the lowest that number has been since the survey began in April of 2004, and showed record falls in new orders and employment. Travel restrictions led to a fall in supply chains, but business confidence was higher based on hopes the economy will recover.