Forex news for North American trade on March 5, 2020:
- Elizabeth Warren is dropping out of the presidential race - NYT
- US January factory orders -0.5% vs -0.1% expected
- Poloz: Resilience of Canadian economy could be seriously tested by virus
- More from BOC Poloz: Coronavirus required prompting decisive action
- BOE's Carney: FPC looking to address any constraints on financing due to virus
- Sweden confirms 28 new virus cases in Stockholm area
- WHO's Tedros says this is the time to pull out all the stops
- Exxon to cut 2020 capital spending in the US
- Italy will postpone March 29 referendum
- France has 423 confirmed coronavirus cases. That is up 138 from Wednesday
- US Initial jobless claims 216K versus 215K estimate
- US Q4 final non-farm productivity +1.2% vs +1.3% expected
Markets:
- Gold up $36 to $1673
- WTI crude oil down 91-cents to $45.88
- US 10-year yields down 14 bps to 0.91%
- JPY leads, AUD lags
- S&P 500 down 106 points to 3024
Risk trades got two huge boosts on Tues/Wed with the rate cuts from the Fed, RBA and BOC along with the kneecapping of Bernie Sanders and yet coronavirus is like a buzzsaw. Risk trades started out soft and softened as the day went on, particularly yen crosses.
USD/JPY finished the day at the lows, down 150 pips to 106.06 from 106.85 after the start of New York trade. Some of the selling was USD-specific as Treasury yields continued to crumble. The previously lows in yield held at the long end, but not by much with US 10s finishing at 0.905%.
Gold found a bid as it erased the loss from last week that increasingly looks like forced liquidation. It was a steady march to $1672 from $1640 and there is more and more talk about the metal, which could lead to a big move before long.
USD/CAD edged over yesterday's high but didn't follow through. Poloz offered some hints that more cuts are still on the table but -- wisely -- said it will depend on what happens with the virus.
Moves that were tougher to explain came in the pound as it climbed back to just below 1.30. Some of that was caginess from Carney about rate cuts but it's generally about the declining US yield advantage everywhere.
That's a bigger story in EUR/USD as the pair tacked on another 100 pips to 1.1235. At this point, European asset managers are getting to the point where they're better off staying home than chasing the marginal returns in US bonds.
