Calm BoE Sends Pound (GBP) Higher
The Pound (GBP) pushed higher in the middle of the week, rallying in response to comments from incoming Bank of England (BoE) Governor Andrew Bailey.
Speaking before the UK’s Treasury Committee, Bailey suggested the bank needed more evidence on the coronavirus before it thinks about adjusting monetary policy.
This quelled speculation that the BoE could follow the Federal Reserve’s lead in announcing an emergency rate cut this week.
With this in mind GBP investors will look to current BoE Governor Mark Carney to confirm the bank’s stance today.
Euro (EUR) Slumps as Italy Announces School Closures
The Euro (EUR) fell sharply on Wednesday following reports Italy is preparing to shut all schools and limit public events throughout the country as it battles to stop the spread of the coronavirus.
Italy is at the epicentre of Europe’s coronavirus outbreak, with a total of 79 deaths linked to Covid-19 so far.
While the move seems prudent given the scale of the outbreak in the country, EUR investors fear this will tip the country into a recession.
EUR investors will now be looking to Eurozone leaders to step up their response to the coronavirus crisis, particularly in regard to fiscal stimulus.
US Dollar (USD) Buoyed by Solid PMI Figures
The US Dollar (USD) clawed back some of Tuesday’s losses yesterday, bolstered by both safe-haven demand and the latest ISM non-manufacturing PMI.
Economists had forecast that the ISM PMI would slip from 55.5 to 54.9 in February, but USD investors were pleasantly surprised to see the index jump to 57.3 instead, marking the largest expansion of the US service sector in a year.
Coming up, we may see the US Dollar relinquish some of these gains later this afternoon as US data is expected to show a modest contraction in factory orders in January.
Canadian Dollar (CAD) Retreats Following BoC Rate Cut
The Canadian Dollar (CAD) dropped on Wednesday as the Bank of Canada (BoC) became the latest central bank to cut rates in response to the economic threat posed by the coronavirus.
Implementing its first rate cut since 2015, the BoC opted to echo the Fed with a larger cut of 50 basis points in an effort to limit the economic impact of the coronavirus.
Australian Dollar (AUD) Lacks Direction amidst Coronavirus Concerns
The Australian Dollar (AUD) was mostly rangebound overnight on Wednesday as the ongoing coronavirus crisis limited demand for the risk-sensitive ‘Aussie’.
New Zealand Dollar (NZD) Stalls in Risk-Off Trade
The New Zealand Dollar (NZD) also struggled to find momentum overnight as a risk-off mood limited the appeal of the ‘Kiwi’.