Forex news for New York trade on March 6, 2020:
- US February nonfarm payroll 273K versus 175K estimate
- Canada February employment +30.3K vs +11.0K expected
- Fed's George: QE effects can pose risks to stability and economy
- US January consumer credit +$12.0B vs $16.5B expected
- Rosengren: Fed should be able to buy broader range of assets if 10-year yields hit zero
- Fed's Bullard: Jobs report shows economy was in good shape in February
- Norway's confirm coronavirus cases rise to 113 from 86
- New York virus cases up to 33 from 22 - governor
- Italy announces nearly 800 new coronavirus today
- OPEC+ statement makes no mention of cuts - report
- Fed's Evans: Fed is paying attention, will respond as appropriate
- Kudlow: Lower import taxes are not being considered to ease global supply chain issues
- Canada February Ivey PMI 54.1 vs 57.3 prior
- US January final wholesale inventories -0.4% vs -0.2% expected
- US trade balance for January $-45.3 billion versus $-46.1 billion estimate
- CFTC commitments of traders: EURUSD shorts are trimmed but still against the price trend this week
Markets:
- S&P 500 down 51 points to 2972
- Gold up $2 to $1673
- US 10-year yields down 13 bps to record low close at 0.78%
- WTI crude down $4.31 to $41.59
- NZD leads, CAD lags
The main story in FX on Friday was the continued and ongoing drop in the US dollar. That was a byproduct today of the massive rally in Treasuries, dropping yields to all-time lows. That sparked a huge unwind in carry trade with money flowing back out of dollars. Only the loonie weakened more than the dollar (and only barely) and that was with a nearly 10% drop in the price of oil.
Crude crumbled as OPEC+ appeared to dissolve. Russia refused to pitch in on output cuts and the rest of OPEC refused to participate without them. Despite some attempts at positive spin, that's a disaster for the cartel and there is no agreement beyond March. In theory, more production could come online at the end of the month despite massive demand destruction.
On the virus, there wasn't any particularly surprising headlines. The numbers continue to rise quickly in Italy and the rest of Europe doesn't seem far behind. There are some troubling videos trickling out of Iran about a horrible situation there in the hospitals. Airlines are warning of dramatically lower demand.
Late in the day, Treasury yields came off the extreme lows led by the front end and that eased some of the fears elsewhere. The rally in stocks late in the day looked like short covering and gold was whipped around before finishing fractionally higher.
FX remains relatively stable but volatility is like coronavirus -- it's spreading and it's only a matter of time until the ranges widen in the currency market and we see some truly spectacular moves. Have a safe weekend and be sure to wash your hands.
