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Global market watch - 27th March 2020

USD

The Fed has been exceptionally accommodating with its monetary policy and as such some analysts are suggesting this is the reason for the latest dollar weakness. Fed Chair Powell made a rare TV appearance and confirmed that the Fed was committed to using all its tools to safeguard the economy. The jobless claims which were expected to be bad and they were. Jobless claims rose eleven fold to 3.3 million and the magnitude of the jump weighed on the dollar all day. The US equity markets have had a very good week so far after the announcement of the US dollars 2 trillion stimulus package and this appears to have calmed the markets desire for dollars. Elsewhere it was reported that the US has passed the Chinese number of confirmed covid 19 cases. We have US PCE for release this afternoon but it will probably be down to the equity markets and coronavirus news for direction.

CAD

The Fed has been exceptionally accommodating with its monetary policy and as such some analysts are suggesting this is the reason for the latest dollar weakness. Fed Chair Powell made a rare TV appearance and confirmed that the Fed was committed to using all its tools to safeguard the economy. The jobless claims which were expected to be bad and they were. Jobless claims rose eleven fold to 3.3 million and the magnitude of the jump weighed on the dollar all day. The US equity markets have had a very good week so far after the announcement of the US dollars 2 trillion stimulus package and this appears to have calmed the markets desire for dollars. Elsewhere it was reported that the US has passed the Chinese number of confirmed coronavirus cases.

EUR

The euro was dragged higher by the pound but at a slower speed. Euro strength was helped by US dollar weakness which was produced by a huge jump in jobless claims. There is the possibility of either outright monetary transactions which have never been used or coronavirus bonds which also have never been used. Either action would really help the single currency.

GBP

It was either a combination of US dollar weakness, a lowering of the negative expectations for the effects of coronavirus on the UK or the chancellors support for the self-employed but sterling rallied 3% against the dollar and 1.5% against the euro yesterday. This week has seen sterling have its best run since 2009 after suffering its worst week in a decade the week before. This coincides with Neil Ferguson from the Imperial College London, who has been advising the government on its coronavirus policy, saying that he now thought there was a possibility that the UK peak for coronavirus was due in 2-3 weeks’ time and that UK deaths from the disease were now likely to be less than 20,000. Hopefully one of those possible 20000 will not be UK Prime Johnson who has just tested positive for coronavirus.

RoW

USDCAD has retraced 50% of the up move since March 9th. This has been caused by USD weakness rather than CAD strength and certainly not by a firm oil price which closed at USD 22 and down 7% on the day.

Stay safe and healthy and enjoy the weekend…

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