Forex news for North American trading on March 17, 2020:
- Mnuchin pitches lawmakers on sending $500B in cheques to Americans
- UK Sunak: UK to make available 330B of guaranteed loans for businesses
- Fed said to review easing bank leverage and accounting rules
- Italy coronavirus cases rises to 31506 from 27980 yesterday. A rise of 12.6%
- Spain unleashes enormous stimulus program, up to 200B euros
- Fed to establish commercial paper lending facility
- UK coronavirus cases rise to 1950 from 1543 the day before, NY case up 45%
- NY Governor Cuomo says he expects virus peak in 45 days
- US January business inventories -0.1% vs -0.1% expected
- JOLTs job openings for January 2020 totals 6963 vs 6400 est.
- US February industrial production +0.6% vs +0.4% expected
- Trudeau says 'millions' of Canadians to receive income support
- US February retail sales -0.5% vs +0.2% expected
- IATA says "cash is pretty much running out" for many airlines today
Markets:
- Gold up $14 to $1528
- WTI crude oil down $1.80 to $26.91
- S&P 500 up 143 points to 2529
- US 10-year yields up 37 bps to 1.08%
- USD leads, AUD lags
The story in the FX market was funding strain in the US dollar market. As you can see here, there wasn't any real movement in currencies except for the US dollar and it was strong everywhere.
This points to severe strain in funding markets despite the Fed and other central banks opening up swap lines. It may also help to explain the selloff in bonds as everyone struggles to find liquidity in a massive delveraging.
Most of the moves came in Europe but cable fell to a fresh low at the London fix, hitting 1.2003. That's dangerously close to a series of Brexit lows down to 1.1943 in 2016. Cable is oversold but no one is catching falling knives at this point. Still, technical buyers aided a late bounce to 1.2077.
CAD was another mover as the bounce in oil turned into another 6% rout. USD/CAD rose 200 pips to 1.4211 and a high of 1.4277. Fellow commodity currencies skidded along the bottom with NZD at 0.5930 despite a huge stimulus package.
Gold traded to $1465 before posting a turnaround. That's a higher low today but not yet a higher high. It reached $1553 on talk of massive US stimulus spending but is consolidating around $1528 now.
