Forex news from the European morning session - 9 March 2020
Headlines:
- Fed increases sizes of overnight, term repo operations
- Fed to cut to zero rates again? The market seems to think so
- Eurozone March Sentix investor confidence -17.1 vs -11.4 expected
- IEA says that oil demand is to drop this year - the first time since 2009
- SNB total sight deposits w.e. 6 March CHF 598.5 bn vs CHF 595.8 bn prior
- China's top epidemiologist sees global virus outbreak lasting until June
- A bloodbath opening for European equities today
- China starts to see schools reopen in some provinces
- Treasury yields tumble further to start the session
- Japan top currency official: We reaffirmed necessity to act appropriately
- BOJ's Kuroda: Markets are making unstable movements
- Central bankers being pushed further into a corner by oil price collapse
Markets:
- JPY leads, CAD lags on the day
- European equities hammered; DAX -7.1%
- US 10-year yields down 35 bps to 0.407%
- Gold up 0.4% to $1,680.50
- WTI down 22.9% to $31.80
- Bitcoin down 14.5% to $7,809
The market did not really build on the epic meltdown in Asia Pacific trading but the overall mood remains rather ominous as equities got dumpstered in Europe while Treasury yields sank to fresh record lows as the misery continues.
Oil is still hanging on just above $30, but prices are still down by nearly ~23% today. In turn, that is keeping pressure on risk assets with European equities seeing 6-7% losses across major indices while 10-year Treasury yields are down by 35 bps to near 0.40%.
If European indices keep their losses towards the end of the day, they will enter a technical bear market following a >20% drop from recent highs.
The major currencies space was a bit more choppy as USD/JPY moved from 102.60 to 101.80 as yields fell, before clawing back some losses to around 102.60 and then easing back to 102.20-50 levels as seen currently.
USD/CHF also fell towards 0.9200 in early morning trade before climbing back to 0.9260-80 levels over the past few hours as the equities rout did not get worse.
The dollar remains mixed as it sees gains against the aussie and kiwi pared back further but is maintaining a strong showing against the loonie - the weakest performer today.
USD/CAD is looking towards the 1.3700 level as the loonie is struggling amid the dramatic fall in oil prices as well as risk on the day so far.
Looking ahead, it is all about the risk mood still and with US futures being halted amid a 5% drop in the first four hours of the week, all eyes turns towards Wall Street to see if the market rout is going to turn even uglier in towards the latter stages of the day.
