Pound (GBP) Undermined by No-Deal Brexit Fears
The Pound (GBP) struggled to find momentum at the end of last week as economists remained concerned about the prospect of a no-deal Brexit.
This comes after the UK outlined its position on trade negotiations with the EU on Thursday, with the government warning it may walk away from talks in June if a there is not a ‘broad outline’ of a deal by then.
Said talks will get underway this week, likely infusing fresh volatility into Sterling as they are likely to highlight the huge gulf between the UK and EU in their aims for a future trade relationship.
Euro (EUR) Steady, ECB Unlikely to Act on Coronavirus
The Euro (EUR) closed last week’s session on steady footing, on the expectation the European Central Bank (ECB) will not take measures to counter the coronavirus on account of it having already expended most of its monetary arsenal.
With the ECB unable to act it appears that Eurozone governments are finally going to step up with stimulus of their own, with EUR investor cheering signs that Germany is preparing to increase its fiscal spending.
Looking ahead, the Euro may remain buoyed at the start of this week as well if the Eurozone’s latest manufacturing PMI confirms growth in the bloc’s private sector soared to a one-year high in February.
US Dollar (USD) Surges amid Coronavirus Panic
The US Dollar (USD) trended higher at the end of last week, holding its ground as safe-haven demand remained buoyed by concerns over the coronavirus.
However, this upside proved limited as USD investors are now all but certain that the Federal Reserve will cut interest rates in March, with the only question being whether it will opt for a larger cut of 50 basis points.
Coming up, expect the US Dollar to come under pressure this afternoon if the latest ISM manufacturing PMI reports a slowdown in US factory activity in February.
Canadian Dollar (CAD) Dented by Weak GDP Figures
The Canadian Dollar (CAD) trended lower on Friday as Canada’s latest GDP figures revealed domestic growth slowed to its worst pace since 2016 in the last quarter of 2019.
Further weighing on the oil-sensitive ‘Loonie’ was a continued rout in oil prices, with WTI crude falling to $44 a barrel on concerns the coronavirus will hurt global demand.
Australian Dollar (AUD) Nosedives on Coronavirus Fears
The Australian Dollar (AUD) fell sharply at the end of last week’s session amid rising market anxiety regarding the coronavirus crisis.
Looking ahead, the ‘Aussie’ could be in for further losses this week if the Reserve Bank of Australia (RBA) signals it will need to cut interest rates in the near-term to help protect Australia’s economy from the impact of the coronavirus.
New Zealand Dollar (NZD) Tumbles in Coronavirus-Driven Selloff
The New Zealand Dollar (NZD) also plummeted during Friday’s trading session, with fears over the coronavirus leaving investors decidedly risk-off.