Oil rout triggers safe haven flight
The UK jobless claims had little impact on the Pound given that the data was historic but average earnings growth showed gradual deterioration ahead of the coronavirus crisis and was mildly negative. Demand for Sterling funds at a two-week high in the latest auction and Bank of England chief economist Haldane stated that H1 GDP figures would be pretty ugly which increased negative Sterling sentiment. The oil price rout also undermined Sterling, benefitting only safe haven currencies; USD and JPY. By midday the Euro had advanced to the 1.1360 area and the Dollar rose to 1.2250 (2-week lows).
Attempted Pound rallies this morning have faltered on poor risk appetite. The latest inflation data (CPI) showed the headline rate has fallen to 1.5% from 1.7%, in line with forecasts. The impact has been slight and Sterling opens close to 1.2300 against the Dollar and 1.1330 on the Euro as risk appetite remains fragile.
With risk-off at full steam, the US dollar witnessed a revival of the safe-haven demand against its main rivals yesterday while US Treasury yields slipped on increased flows into the US bonds.
The US Senate approved another relief package, this time worth $484 billion and oriented to lend extra support to the US economy and hospitals. The bill is expected to pass the House of Representatives tomorrow.
In the US data space, February’s House Price Index is due seconded by the usual weekly report on US crude oil supplies by the EIA.
The Euro has managed to regain some poise as we begin Wednesday’s trading session after falling slighting overnight against the Dollar. The common currency is now looking to advance to the area of 1.0870 and beyond. Currently navigating in a consolidative range, above the 1.0800 mark and unable to surpass a key barrier at 1.0900.
The market’s attention still remains on any coronavirus developments amidst efforts from governments to ease lockdown measures in order to re-activate the world’s economy. As of writing, the Euro trades around the 1.0865 against its US counterpart.
Data to watch
06:00 – GBP – CPI