Forex news for NY trading on March 3, 2020
- US stocks close lower. Dow down nearly 800 points
- Ray Dalio: Don’t expect much more stimulation from rate cuts
- Fed's Mester: Virus will weigh on growth for at least the first half, hard to know how much
- JPMorgan tests US virus plan to have thousands working from home
- WTI Crude oil futures settle at $47.18
- Washington state reports two additional virus deaths and seven more cases
- Trump says he's disappointed Fed is following, not leading
- Trump admin considers using disaster program to pay virus treatment of uninsured
- CDC says there are 60 confirmed cases of coronavirus in US
- Canada's Morneau: Canada's fiscal position gives that leverage to respond
- Germany's Econ Min. Altmaier: were doing everything to shield German economy
- SNB Maechler: SNB is never under pressure. Will discuss current prognosis in 2 weeks
- ECB's Knot: Virus could cause great damage to Dutch economy
- European shares hold onto gains but off the highest levels
- ECB's Villeroy says growth should remain positive for the eurozone as a whole this year
- Italy coronavirus case numbers continue to soar
- Trump says he expects $8.5B emergency coronavirus funding bill
- OPEC+ panel recommends cutting output by 600K bpd in Q2 through year-end
- Powell Q&A: We do like our current policy stance, it's appropriate but prepared based on flow of events
- Powell opening statement: Outbreak has prompted significant moves in financial markets
- Trump wants more rate cuts
- Mnuchin: Not considering a China tariff rollback at this time
- Today will be a big test of the Fed's power over the market
- Fed cuts interest rates by 50 basis points in first emergency move since financial crisis
- It's Super Tuesday: Here are the two main races to watch
- ISM New York business conditions 51.9 vs 45.8 prior
- The White House is skeptical of short-term stimulus - report
- German caucus chief: No stimulus package needed due to virus
- OPEC will block press access to HQ during meeting
- ECB's Kazimir: Panic and overreaction could cost us a lot
- The JPY is the strongest the CAD is the weakest as NA traders enter for the day
The Federal Reserve cut rates by 50 basis points to 1 to 1 1/4% after an emergency meeting of the FOMC. The decision was unanimous. The full statement read:
The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity. In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 1/2 percentage point, to 1 to 1‑1/4 percent. The Committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.
The decision was unanimous. It was the first emergency decision since October 2008. The comments during the press conference did not giving meaningful hints about a further cut at the March meeting. That helped to reverse course in the stock markets on the disappointment that everyday was not going to be Christmas/Halloween/or Birthdays. Pres. Trump was certainly stumping for more cuts as he criticized the Fed for remaining behind the curve and not leading despite the 50 basis point cut.
The decision was not matched by any other central banks (at least so far). That, along with tumbling yields (see table above), led to dollar pressure. The USD was the 2nd weakest currency of the major, with the CAD leading the downside charge (see rankings below).
With the Bank of Canada interest rate decision tomorrow, the market has a 25 basis point cut baked in the cake with a chance for a 50 cut at 64% (and other cuts expected later this year). The expected cut, along with a bounce of the USDCAD off it's 200 hour MA after the rate decision, helped to keep the CAD better offered today (and as the weakest of the majors).
The JPY pairs were under pressure for most of the day (higher JPY) and led to the pair being the strongest of the majors. . The USDJPY is down over -100 pips on the day. The EURJPY and GBPJPY each fell about -74 pips on the day (although off lows for the day were at -110 and -125 pips respectively). The RBA cut rates by 25 basis points. That was fully discounted and led to a rise in the AUD - especially after the Fed did their 50.
As or other countries like the EU, Switzerland, Japan it is hard to see those countries having room to cut rates. That can keep the pressure on the greenback - especially if stocks remain with a downward bias. If stocks rally, there may be a reason for a more stable/higher dollar as funds flow back into US assets. Right now, traders are suddenly not as in love with US equities as they were just a few weeks ago.
In other markets today:
- Spot gold is up $48.48 or 3.05% at $1637.85.
- WTI crude oil futures tumbled from a high of $48.66 to a low price of $46.47 before stabilizing and moving back above the $47 level. We are currently trading at $47.36. That is up $0.61 on the day or 1.3%
In the US stock market, the major indices closed down over -2.8% each. The final numbers are showing:
- S&P index -86.86 points or -2.81% at 3003.37
- NASDAQ index -268.07 points or -2.99% at 8684.09
- Dow -785.91 points or -2.94% at 25917.40
European shares played catch up in early trading after the late day rally yesterday in US stocks. As a result they still end of the day up but well off the high levels for the day.
