Forex news from the European morning session - 6 March 2020
Headlines:
- Fed's Bullard: Don't want people to focus so heavily on March meeting
- Fed's Bullard: We are all struggling to understand the effects of the coronavirus
- Russia said to have rejected OPEC proposal for additional oil output cuts
- OPEC said to have no intention to cut output without Russia
- Iran reports another 1,234 new coronavirus cases today, total at 4,747 cases now
- China says "the day is not far away" before easing restrictions on Hubei, Wuhan
- The epic meltdown in Treasury yields continues
- Germany reports 534 confirmed cases of the new coronavirus, up from 400 cases yesterday
- A 50 bps rate cut by the Fed is now fully priced in, will Powell & co. deliver?
- Thailand says to give cash handouts among steps to boost the economy
Markets:
- CHF leads, CAD lags on the day
- European equities sharply lower; E-minis down 3%
- US 10-year yields down 18 bps to 0.732%
- Gold up 0.9% to $1,687.51
- WTI down 5.0% to $43.55
- Bitcoin up 0.1% to $9,125
There was plenty of action throughout the session as risk tumbled amid a capitulation in Treasury yields, which weighed heavily on the dollar as well.
European equities opened down by over 1% but those losses quickly turned into over 2% and now we are seeing major indices down by over 3% across the board.
This came as Treasury yields experienced a meltdown, with 10-year yields falling from 0.81% to 0.69% at one point with 30-year yields slipping by over 20 bps under 1.30%.
USD/JPY moved lower from 105.90 to 105.00 before seeing a limited bounce towards 105.15-30 currently. But the capitulation in Treasury yields set off a big fall in the dollar against the rest of the major currencies bloc.
EUR/USD climbed from 1.1240 to 1.1341 before backing off a little while USD/CHF made fresh lows since March 2018 - falling from 0.9450 to 0.9350.
The kiwi also capitalised on the dollar weakness to post modest gains on the back of some short covering, with NZD/USD rising from 0.6320 to 0.6373 before easing a little.
There was also drama in Vienna as the OPEC+ meeting seems to be dead on arrival as Russia is not on board with the additional oil output cuts proposal. Oil dipped from $44.50 to $43.30 and is hovering at the lows now - down by over 5% today.
That is weighing on the loonie as USD/CAD sits higher just above 1.3400 on the day.
Looking ahead, we have US non-farm payrolls but expect that to be overshadowed by the sour risk mood in the market amid the virus fallout. US futures are pointing to heavy losses to start the day and it sure looks like the Fed experiment this week has failed.
