Forex news for New York trade on March 12, 2020:
- ECB leaves rates unchanged, announces new LTRO, expands QE by 120B
- New York Fed to conduct purchases across a range of maturities
- Lagarde opening statement: The virus is a major shock
- Lagarde Q&A: Decision on package was unanimous
- France closes all education establishments
- German coronavirus cases jump to 2369 from 1567 yesterday
- New York says no gatherings of more than 500 people. Closes Broadway
- Italy coronavirus cases rise to 15,113 from 12,462 yesterday
- US sells 30-year bonds at 1.320% vs 1.280% WI
- Canadian PM Trudeau is quarantining himself. His wife is sick
- Brazilian who met Trump this weekend tests positive for coronavirus
- "They know nothing" Jim Cramer unloads, says there are no signs anyone in government understands problem
Markets:
- Gold down $64 to $1570
- WTI down $1.94 to $31.04
- US 10-year yields up 1.7 bps to 0.88%
- S&P 500 down 9.5%
- USD leads, AUD lags
It was another harrowing day as markets completely tanked. It started yesterday as hopes that President Trump would get on top of the virus were dashed by an incoherent speech that misstated actions and failed to deliver anything but an overdue travel ban.
Futures were limit down and US stocks opened limit down.
The FX market is increasingly disjointed and a big move came in the pound today. Part of that is lower UK rates now but there was a major bid in USD all day and that contributed as well.
The ECB failed to shore up confidence as the measures ticked a few boxes but Eurozone banks sent a clear signal as they absolutely crumbled. Equities in Europe had their worst day since 1987 with Italy leading the way with a 17% decline.
The Fed tried its hand with an announcement that included a $500B 3-month loan operation just 32 minutes into the future and closing at the end of the day. That pointed to severe stresses in the financial system and the threat of a breakdown. In the aftermath, 3-month crosscurrency swaps were one of the markets that tightened, hinting at overseas liquidity problems.
In the broader picture, equities rallied on the Fed news but only for about an hour as worries about the financial system spread.
