With the markets still buzzing over the deep Fed rate cut, the investors’ focus lies with the united front to fight against the global recession due to COVID19 pandemic.
The markets got off to a volatile start with the Fed cutting the Fed funds rate by 50 basis points. The move comes a few days after Fed Chair said that the Fed was watching the market developments closely. The Fed is due to meet later this week.
The Reserve Bank of Australia held its monetary policy meeting over the week, wasting no time in following the Federal Reserve’s lead. The RBA trimmed rates by 0.25%, lowering the benchmark rate to 0.50% to combat the downside risks of growth.
The Bank of Canada cut interest rates by 50 basis points, although the impact on the Canadian economy is not fully known. BoC’s Poloz said that lower rates were needed to support a fragile and an uncertain economic outlook.
The US monthly jobs report saw the unemployment rate falling to 3.5% The monthly payrolls also surged with the U.S. economy adding 273k jobs in February, more than the 175k estimates. The average hourly earnings rose 0.3%, in line with the estimates and up from 0.2% from the month before.
The European Central Bank will be holding its monetary policy meeting on Thursday. The markets will be looking to the meeting for further clues on monetary policy.
START TRADINGLQDFXperts – Weekly Forex report
Nervous investors are shunning risk due to the coronavirus outbreak. Investor risk appetite remains weak as the coronavirus has now spread to Europe and the United States.
The EUR/USD posted strong gains for a second straight week. For the week, the US index was down 2.4% which was its worst weekly performance since early February 2016. The data from the United States this week will focus on the inflation data.
The GBP/USD posted gains throughout the week and gained 1.7%. British Manufacturing PMI climbed above the 50-level in February, with a reading of 51.7 points. The pound enjoyed a strong week, but can it continue to make up ground against the dollar? The British economy is performing decently, but the post-Brexit talks with the EU are expected to be difficult.
The Dollar/yen posted sharp losses for a second straight week. Japan will be releasing the final revised GDP for the fourth quarter of 2019. The yen is making the most of its safe-haven status. However, the virus is taking a toll on the Japanese economy, which could make the yen less attractive to investors.
The AUD/USD rebounded sharply last week, posting gains of 2.1%. Australian data was mixed last week. The coronavirus continues to disrupt the global economy, especially in China and other Pacific countries, including Australia. China is Australia’s largest trading partner, so the economic toll of the outbreak will be felt in Australia.
The USD/CAD was almost unchanged last week. Weak investors’ risk appetite means that minor currencies like the Canadian dollar are likely to remain under pressure.
LQDFXperts – The week ahead – United front against the coronavirus crisis
The coronavirus shakes up the global economy and continues to weigh on investor risk appetite. Investors were pleased to see that central banks formed a united front in response to the coronavirus crisis. The move came as impact of the Coronavirus is said to hit the global economy badly.
- On Tuesday (10.03) investors expect Eurozone Revised GDP with the estimate for Q4 standing at 0.1%. Economic conditions in the eurozone remains weak, with growth of just 0.2% in the past two quarters.
- On Wednesday (11.03) the investors’ focus shifts to British GDP, the British Annual Budget Release and the US Inflation. The brand-new Chancellor of the Exchequer, Rishi Sunak, will present the new UK budget. This event, also known as the Spring Statement, will consist of new forecasts for the economy.
- On Thursday (12.03) traders’ eyes are on ECB Rate Decision. The ECB has been content to keep interest rates at zero since 2016 and no change is expected at the upcoming meeting. A dovish rate statement could put pressure on the euro.
- On Friday (14.03) all eyes are on German Final CPI. Consumer inflation in the eurozone’s largest economy remains weak, as CPI has posted two declines in the past three readings. The January reading came in at -0.6%. Analysts expect a stronger showing in February, with an estimate of 0.4%.
Follow this week’s economic calendar.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, CNBC, FX street