Forex news from the European morning session - 10 March 2020
Headlines:
- China president Xi says that Hubei province should resume production step by step
- S&P 500 futures hit limit up on the day
- BOJ reportedly mulling expansion of ETF purchases
- Italy to suspend payment on mortgages for individuals and households
- First city in Hubei set to return to normal conditions in the coming days
- Russia's Novak: Russia can hike production by 500k bpd in the near future
- Japan PM Abe confirms second stimulus package to deal with coronavirus outbreak
- Saudi Aramco says they will supply its customers with 12.3 mil bpd in April
- China says that all temporary coronavirus hospitals in Wuhan are now shut
- Air France to cancel 3,600 flights this month due to the coronavirus outbreak
- RBNZ's Orr: Lower bound for policy rates could be in negative territory
- BOJ's Kuroda: BOJ is making efforts to stabilise financial markets
- RBNZ's Orr: 50 bps rate cut last year has bought us an enormous amount of time
- US February NFIB small business optimism index 104.5 vs 103.0 expected
Markets:
- CAD leads, JPY lags on the day
- European equities higher; E-minis up 4.0%
- US 10-year yields up 15 bps to 0.69%
- Gold down 1.1% to $1,662.50
- WTI up 10.2% to $34.30
- Bitcoin up 2.8% to $8,080
The market is bouncing back a little after the staggering drop yesterday as all eyes now turn towards the US response on how they are going to deal with the economic fallout caused by the coronavirus outbreak.
Trump built up market hopes overnight saying that they will deliver big action but only time will tell what that will be and if they will meet those expectations now.
US futures soared in the European morning, with S&P 500 futures hitting limit up of 5% before easing a little. That saw USD/JPY climb up to a high of 105.21 before backing off after testing the 100-hour moving average.
Treasury yields also recovered strongly with 30-year yields up by 18 bps to 1.177% as we also see oil prices ignore the Saudi-Russia war drums to bounce back by 10% on the day.
As oil prices kept the gains from the bounce, the loonie is the best performing major currency as USD/CAD eases to 1.3650. But the dollar itself is also performing strongly as the greenback is posting gains against the rest of the major bloc as well.
EUR/USD fell to 1.1360 ahead of European trading and stuck around 1.1350-70 for the most part. Cable also fell from 1.3050 to 1.3020 as the dollar stayed firm on the session.
Looking ahead, it is all about how the market is going to react to all the happenings surround the economic fallout from the virus outbreak. Central bank action, fiscal stimulus, containment measures, how quickly the virus is spreading in major regions etc.
The bounce today isn't quite indicative of a turnaround in sentiment just yet. The price action today is but one piece of the bigger picture in this virus saga and things may all turn on its head by the time we approach the end of the week.
For now, all eyes will turn towards Trump and his press conference after sitting with Congress. My bet is that he will wait until after the market close before saying anything.
