Data showed factory activity across the world contracting sharply due to the coronavirus pandemic led a wider selloff in global stock markets.
Sterling steadied against a buoyant dollar amid the wider selloff in global stock markets as manufacturing gauges tumbled across the globe. The Purchasing Managers’ Index (PMI) surveys in Asia, the euro zone and the UK underscored the widening damage wrought by the pandemic.
The coronavirus, which has now infected more than 700,000 people, upended supply chains and led to city lockdowns worldwide.
Data showed output from Britain’s manufacturing sector shrank at the fastest pace since the euro zone debt crisis in March. The spread of coronavirus caused spiralling delays and hammered business confidence.
The final version of the IHS Markit/CIPS PMI slumped to 47.8 — its lowest since July 2012 — from 51.7 in February. It was slightly weaker than a preliminary “flash” reading of 48.0 recorded earlier in March.
Markets were spooked after U.S. President Donald Trump’s dire press briefing late Tuesday. Trump warned Americans of a “painful” two weeks ahead in fighting the coronavirus even with strict social distancing measures.
The pandemic has shown few signs of abating. Global cases were on track to hit one million within a day or two, stretching over more than 200 countries.
START TRADINGForex – Factory activity contracted sharply
The dollar held gains on Thursday as investors rushed to the security of the world’s most liquid currency. The dollar index against a basket of major six currencies gained 0.53% overnight.
Τhe U.S. currency advanced against most of its major peers except for the safe-haven yen. The dollar traded at 107.15 yen after it touched a two-week low of 106.925.
The Australian dollar changed hands at $0.6080, having dropped 0.99% in the previous session.
The pound traded flat to the dollar at $1.2420, reversing losses made earlier in the day. Sterling jumped 1% against a broadly weaker euro to trade at 87.92 pence.
Sterling’s movements over the last few weeks have largely been dollar driven. Recent gains against the greenback due to an easing of demand for the U.S. currency as central banks pump billions of dollars of liquidity into markets.
Oil prices were lower after the EIA report. U.S. crude futures dropped 31 cents to $20.17 a barrel as of 10:49 a.m. ET (1449 GMT). Brent was down $1.35, or 5%, to $24.99 a barrel.
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Sources: Reuters, Investing, CNN money