Daily Market Pulse

Daily Market Pulse

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Viral cases ease

USD

Has the tide turned or are the markets just grasping at any good news? DOW Futures are higher this morning pointing towards an opening of around 800 points higher when the US equity markets open later today. Some slowing death rates in Europe, as well as New York, have given investors some hope that maybe we have turned the corner. As we begin the week, the USD is stronger against the EUR and JPY but has turned lower against the GBP and CAD. US Treasury yields were higher this morning as the 10-year note was trading at 0.6305% and the 30-year bond was trading at 1.2511%. While fatalities in New York have slowed, giving traders some optimism, the U.S. Surgeon General did say on Sunday that this week could be the hardest yet in terms of containing the virus. We shall see if the roller-coaster ride in equities continues.

EUR

EUR/USD trading just above overnight lows, as weak Eurozone data weighed on the single currency despite the news that Italy and Spain have seen some improvement in virus case deaths. Eurozone investor confidence fell to -42.9, a level not seen since the 2008 financial crisis. The previous level was -17.1. The four largest Eurozone countries hit by the Coronavirus, have reported better than expected statistics. Italy, the country hit hardest by the pandemic, had their lowest reported death total since March 19. Spain, France, and Germany also had fewer mortalities, and this initially proved to be EUR positive. However, the poor economic numbers expected to slow economic recovery continued to weigh on the single currency and testing of support levels is expected.

GBP

GBP/USD had a bit of a roller-coaster ride in overnight trading, initially falling with news that PM Boris Johnson had been hospitalized due to the Coronavirus. After initially, staying in self-isolation, he was forced to enter the hospital when his symptoms refused to abate. After testing overnight support levels, the GBP rallied now trading near overnight highs as the news was released that the PM is doing well. While the PM remains in charge of the government, concerns remain as most of those who contact the virus tend to recover within a week, the fact that Johnson was admitted is cause for concern. The longer he stays hospitalized, the more pressure we will see on GBP. If the PM remains unable to lead the government, Foreign Secretary Raab and top advisor Cummings would be among those looking to take the lead of the British government. This story will continue to develop and keep the pressure on the pound. Adding to the woes of sterling, UK consumer confidence fell to -34 in the period from March 16-27, the biggest fall since the number started being recorded in January 1974.

JPY

Asian equity markets were higher ahead of the opening US trading later today as the market seems to be grabbing any positive virus news and trading off of it. Japanese PM Abe is expected to announce a month-long state of emergency, according to the news agency NHK. Virus cases had been on the rise in Tokyo and Osaka. USD/JPY is trading towards the top of its overnight range and resistance levels are expected to be tested in trading later today. 

CAD

USD/CAD has moved lower in overnight trading as there are hints that Saudi Arabia and Russia are close to a deal over oil production. Oil prices have proven to be as volatile as equity prices in the last few trading sessions, as the slightest news can jolt the market. A meeting between OPEC and their allies, originally scheduled for Monday was delayed, causing a move in the futures market lower, but then the comments about a possible deal reversed the market. Canada had declined in jobs in March and the unemployment rate is expected to rise from 5.6% to 6.6% and that number is expected to fall further in April. Economic numbers will eventually weigh on the Loonie and the USD/CAD should move higher.

CNY

Despite the upbeat news around the world regarding the virus, Reuters reported that China had 39 new cases, all but one of them reported from abroad as opposed to 30 cases a day earlier. According to a report from Reuters, China’s Vice Finance Minister said that government debt levels remain under control, but that the pandemic is causing a negative impact in retracting new foreign investment. The Chinese Banking and Insurance Regulator has stated that the government will support local governments adding capital to smaller regional banks

Quick Insights

USD: DOW futures higher, USD mixed to start the week.

USD: DOW futures higher, USD mixed to start the week.

EUR: EUR taking advantage of USD pressure.

EUR: EUR taking advantage of USD pressure.

GBP: PM Johnson hospitalized, GBP trades lower, then bounces back.

GBP: PM Johnson hospitalized, GBP trades lower, then bounces back.

JPY: Traders exiting safe haven trades, USD/JPY testing overnight resistance.

JPY: Traders exiting safe haven trades, USD/JPY testing overnight resistance.

CAD: OPEC meeting has USD/CAD lower trading within the overnight range.

CAD: OPEC meeting has USD/CAD lower trading within the overnight range.

CNY: China’s vice minister says debt levels remain under control.

CNY: China’s vice minister says debt levels remain under control.

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