The USD looks to end the week under pressure against all major currencies. Yesterday, the US equity markets continued their 3-day surge despite US jobless claims rising to 3.283 million in the last week due to companies letting workers go, either temporarily or permanently. While this number was staggering, it did fall within the levels of expectation and actually beat the prediction of 4 million. Investors chose to rally behind the moves of the Federal Reserve as Chairman Jerome Powell stated in an interview on NBC that the Fed would not "run out of ammunition”. As the DOW rose during the day, it was rumored that the “smart money” was returning to the market and buying. The stimulus package goes to the House later today and is expected to pass without any drama. After finishing up over 1,300 points, DOW futures are lower this morning, pointing towards 200-points lower when the market opens later this morning. Later this morning, the University of Michigan Consumer sentiment is due out and forecasted to fall from 95.9 to 90.0, but that number could be much lower. US Treasury yields have held relatively steady over the last few days and this morning is slightly lower with the 10-yer note trading at 0.7948% and the 30-year bond trading at 1.3705%. As the US has now reported having more Coronavirus cases than China, and with that number continuing to rise, expect the USD to finish this week under pressure.
After testing overnight highs the EUR/USD is now trading towards the lower end of its overnight range. Despite having problems of its own, the EUR is benefiting at the moment from USD pressure. Despite the rise in the EUR, EU leaders can’t seem to agree on a unified economic response as Germany continues to oppose the issuing of common bonds. France, Italy, and Spain are pushing for these “corona-bonds” and this continued debate could eventually weigh on the EUR. ECB President Christine Lagarde is supportive of the common bonds. Despite reporting fewer fatalities from the virus yesterday, Spanish and Italian hospitals remain overwhelmed.
GBP/USD has also come off overnight highs after rallying overnight, taking advantage of the USD weakness. Once again, the market is ignoring rising coronavirus cases in Great Britain and the suspension of any Brexit negotiations. After the Bank of England left rates unchanged on Thursday, the central bank states that it stands ready to expand its asset purchase program further if needed. Technically the rebound in GBP is getting close to the “overbought” area as the move higher has been pretty drastic. Profit-taking could see the pound move a little lower during the trading day.
USD/JPY remains under pressure but is trading off its overnight lows as we begin the North American trading day. Concerns over the global recession have traders once again considering safe-haven trades. Traders remain concerned that there is an imminent global recession on the horizon despite all the help the US stimulus package may provide. According to Japanese Economic Minister Nishimura, the Japanese job market is coming under pressure. According to Nishimura, “job offers are plunging”. Japan also reported a spike in virus cases this past week causing the postponement of the 2020 Summer Olympics until 2021.
USD/CAD continues to move lower despite expectation of a dramatic economic slowdown in March. The loonie is being supported by oil gains overnight as the government around the world pledged economic stimulus, allaying the fears that the virus outbreak would lower demand for oil. Brent crude was up 22 cents at $26.56 per barrel, while US crude was 42 cents higher at $23.02. Analysts still expect the worst for the Canadian economy in the next few months with double-digit contraction expected in Q2. While there is light at the end of the tunnel, economists expect problems in the near-term.
According to reports from the Chinese state media, President Xi Jinping has spoken with President Trump and offered cooperation to coordinate efforts to control the viral outbreak. President Trump reiterated the need to work together. The phone conversation between the two presidents came after President Xi spoke before the G20 video conference, calling for a greater international coordinated effort. Xi also stated that the Chinese are willing to provide “experience and information” without reservation. It is hoped a coordinated effort will have a positive effect on combatting the pandemic.