Mar 26, 2020, 3:49:10 PM

Key Releases

United States of America

Today, the US dollar is generally weakening against main competitors – the euro, the pound, and the Japanese yen.

The USD 2 trillion package of economic support measures agreed by the Senate yesterday could not strengthen the US currency, as investors fear a serious deterioration in the labor market. Published today, data on initial jobless claims set a historical record, increasing from 232.5K to 3.283 million. Fed Chairman Jerome Powell said that this is an atypical recession which may be short-lived. If the virus is brought under control, confidence will return to employers, and the economy can expect an equally sharp growth. Also in an interview with NBC, Powell noted that the regulator will continue to use the tools necessary to combat the economic downturn caused by the epidemic.

Eurozone

The euro is strengthening against the US dollar today, but weakening against the yen and the pound.

Gfk Germany’s consumer climate index data released today was extremely weak. The indicator fell dramatically from 8.3 to 2.7 points, which is the lowest figure since 2009. According to the accompanying statement, German consumption will be seriously reduced due to the coronavirus epidemic. Experts also recommended retailers, manufacturers, and service providers to prepare for the recession. The initial stage of stockpiling (food, medicine) that supported sales will end soon, and quarantine and related travel restrictions can minimize trade. A certain hope of the European investor is inspired by the reduction in the number of Italian citizens newly infected with coronavirus for the fourth day in a row, which suggests that the peak of the epidemic is gone.

United Kingdom

The pound is now strengthening against the euro and the US dollar and shows ambiguous dynamics with the yen.

February data on UK retail sales released today was negative. YoY,  the indicator was 0.0%, and MoM, it decreased by 0.3% amid the development of the coronavirus epidemic. The Bank of England today expectedly left the rate unchanged at 0.10% after two emergency declines during the month. In an accompanying statement, officials noted that the UK is suffering from severe economic and financial disruptions, although the exact damage is still difficult to determine. In the near future, the regulator expects a decrease in household spending, a reduction in business investment, a weakening of exports, and rising unemployment.

Japan

The yen is now strengthening against the euro and the US dollar and shows ambiguous dynamics with the pound.

The yen strengthens, despite the negative statements of the Japanese government. In a monthly report published today, it was said that the country's economy "is in a severe situation, extremely depressed by the novel coronavirus". In the future, the difficult situation may continue and will threaten the risk of a decline in the Japanese and global economies. We should also note the comments of the new Bank of Japan member Seiji Adachi, who said that providing liquidity to the markets is a better way to respond to the crisis than lowering interest rates.

Australia

AUD is strengthening today against its main competitors – GBP, USD, JPY, and EUR.

In the absence of significant releases, the movement of the Australian currency is technical. It should only be noted that local officials are also preparing measures to support the economy. The state of South Australia announced a one-time cash payment of AUD 500 to households in which at least one adult family member is unemployed.

Oil

Oil quotes are correcting down today.

Prices are pressured by an increase in initial jobless claims in the United States, which may indicate an additional reduction in energy demand.  Also, growth in the US oil reserves by 1.623 million barrels (according to the EIA report) contributes to the decrease. In view of this, US Secretary of State Mike Pompeo called on Saudi Arabia to end the confrontation with Russia and stabilize the oil market.

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