Forex news from the European morning session - 4 March 2020
Headlines:
- Russia said to have opposed plan to deepen OPEC+ output cuts by 1.2 mil bpd
- US MBA mortgage applications w.e. 28 February +15.1% vs +1.5% prior
- China president Xi: Virus control work shows positive signs
- RBA's Debelle: We have capacity to cut rates one more time, beyond that we will have to consider QE
- OPEC said to be pushing for more than 1 mil bpd of output cuts
- Eurozone January retail sales +0.6% vs +0.6% m/m expected
- UK rates market is pricing in something big by the BOE this month - or maybe even sooner?
- UK February final services PMI 53.2 vs 53.3 prelim
- Fed's Mester: I supported rate cut on basis of fresh uncertainty over medium-term outlook
- Germany February final services PMI 52.5 vs 53.3 prelim
- ECB said to have held a conference call yesterday to assess coronavirus situation
- China annual car sales reportedly plunge by most on record in February
- Switzerland February CPI -0.1% vs +0.1% y/y expected
- France's Le Maire: Europe needs to be ready to use fiscal stimulus to boost the economy
- BOJ's Kuroda: Japanese economy is being supported by fiscal spending
- Germany January retail sales +0.9% vs +0.9% m/m expected
- NBC projects Biden to win Texas Democratic primary
Markets:
- AUD leads, EUR lags on the day
- European equities higher; E-minis up 2.5%
- US 10-year yields up 0.8 bps to 1.007%
- Gold up 0.4% to $1,647.06
- WTI up 1.9% to $48.07
- Bitcoin flat at $8,730
It was a session with plenty of headlines but very little to really shift the dial in the market.
The focus remains on investors largely digesting the 50 bps rate cut by the Fed yesterday and how other central banks are going to respond and what this would all mean for global assets against the backdrop of the ongoing coronavirus outbreak.
The market was sending mixed signals initially, with US futures sitting higher - helped by Joe Biden's victory on Super Tuesday - but Treasury yields crept lower to start the session.
USD/JPY was choppy as it moved from 107.60 to 107.30 before recovering back to the 107.60 as we see Treasury yields turn around on the session and US futures maintain solid gains alongside European equities on the day.
The recovery in yields also pushed EUR/USD lower with the pair falling from 1.1180 to 1.1110 but other dollar pairs kept more steady in general.
The aussie and kiwi kept up the more positive momentum after the upside moves yesterday with AUD/USD keeping above 0.6600 while NZD/USD is challenging the 0.6300 level.
Meanwhile, the pound couldn't really make up its mind on the day as UK rates market prices in a near 40 bps worth of rate cuts ahead of the BOE meeting this month. Cable fell to 1.2770 before bouncing back to 1.2830 and is resting in between now.
Looking ahead, the market still has a lot of figuring out to do as investors continue to digest the Fed rate cut yesterday and how this is all going to play out in the coming weeks.
