Virus peak still not reached
The UK coronavirus stats produced more record highs suggesting earlier claims we’d reached the peak may have been premature. More encouragingly, reports stated Boris Johnson’s condition was stable. Michel Barnier stated that he will speak to UK Chief Negotiator David Frost next week to organise upcoming negotiation rounds, but markets remained uneasy over time pressures. Market sentiment improved, partly due to firmer commodity currencies and concerns around Eurozone budget policies helped Sterling sentiment.
Overall the Pound was relatively steady, moving above 1.2400 on the Dollar and 1.1430 against the Euro before a slight correction. The RICS UK housing index fell to 11%, down from 29% previously, but sales expectations declined to a record low. The Pound is slightly lower at market open as February GDP data recorded a 0.1% decline. Position adjustment ahead of the Easter bank holidays could produce another volatile day for the Pound, and rumour has it that Dominic Raab will announce an extension to lockdown at the 5pm Covid briefing.
The US dollar was back in demand through the first half of yesterday amid disappointing news surrounding the coronavirus pandemic. Investors largely ignored the latest update, which showed that New York State recorded its highest death toll on Wednesday, rather turned optimistic on forecasts that the pandemic peak could come soon. This was evident from a strong rally in the US equity markets and dented the USD’s safe-haven status. The release of the FOMC minutes did little to influence the USD price dynamics or provide any meaningful impetus to the currency.
Later today, attention will shift to the US economic docket, which highlights the release of US initial weekly jobless claims. This along with March PPI figures might influence the USD price dynamics and provide some impetus. Apart from this, fresh developments surrounding the coronavirus saga will further contribute towards producing some meaningful trading opportunities.
The Euro is lacking a clear directional bias this morning as the European Union finance ministers continue to struggle on agreeing a coronavirus economic rescue package.
The common currency suffered moderate losses yesterday against the Dollar, as Spain reported the highest daily increase in coronavirus cases deaths in four days. Meanwhile, the European Central Bank insisted they have an obligation, given the current economic climate, to keep rates low for a sustained period of time while a number of leading German economic forecast institutes have predicted as much as a 10% shrink in their economy for the second quarter.
The Euro remains under pressure and is currently trading around the 1.0865 with the Eurogroup talks resuming later today. If some form of agreement can be reached, a limited boost could be on the cards for the common currency.
Data to watch
06:00 – GBP – GDP
All Day – All Currencies – OPEC Meetings
All Day – All Currencies – OPEC-JMMC Meetings
Day 3 – EUR – Eurogroup Meetings
11:30 – EUR – ECB Monetary Policy Meeting Accounts
12:30 – USD – Unemployment Claims
12:30 – USD – Core PPI
12:30 – USD – PPI
14:00 – USD – Fed Chair Powell Speaks
14: – USD – Prelim UoM Consumer Sentiment