Pound (GBP) Gains amid Global Coronavirus Sell-Off
The Pound (GBP) trended higher against the majority of its peers yesterday, largely thanks to Sterling being more resistant to coronavirus concerns than other currencies.
With a relatively low number of cases in the UK and the government still in its ‘containment’ phase, it seems GBP investors remain more preoccupied by Brexit, where a lull in developments benefited the Pound.
Looking ahead, we expect Sterling to struggle to find momentum today as markets brace for the publication of the UK Budget on Wednesday.
Euro (EUR) Jumps despite Italy Quarantine
The Euro (EUR) proved to be one of the biggest winners amid the coronavirus driven sell-off on Monday, with demand for the single currency skyrocketing in response to the slump in the US Dollar (USD).
This comes in spite of Italy announcing that it’s putting the entire country into quarantine in an effort to contain Europe’s largest outbreak of the coronavirus.
Coming up, today sees the release the latest Eurozone GDP estimate, which is expected to confirm growth in the bloc slowed to just 0.1% at the end of 2019, potentially weighing on the Euro as it highlights just how close the Eurozone is to a possible recession.
US Dollar (USD) Retreats as US Yields Plummet
The US Dollar (USD) got off to a poor start this week, with the currency falling in response to tumbling US bond yields.
This comes amid growing expectations for a deep rate cut from the Federal Reserve next week, with markets pricing in a 75% chance of a 1% drop, according to CME’s FedWatch tool.
However, with US yields rising after Trump announced plans to provide tax relief to companies who may be struggling with the impact of the coronavirus, the US Dollar could claw back some of its losses today.
Canadian Dollar (CAD) in Freefall Following Collapse in Oil Prices
The Canadian Dollar (CAD) plummeted by over 2% on Monday, with the oil-sensitive currency dumped by investors after crude prices fell as much as 30% at the start of the week after Saudi Arabia launched an oil price war following slumping global demand due to the coronavirus.
Australian Dollar (AUD) Rocked by Market Chaos
The Australian Dollar (AUD) dropped sharply at the start of the week as the currency got caught up in the sell-off of risk-sensitive assets.
These losses were extended overnight after Australia’s business confidence index dropped to a six-year low in February.
New Zealand Dollar (NZD) Slumps in Risk-Off Trade
The New Zealand Dollar (NZD) also fell off a cliff on Monday as investors shunned the risk-sensitive currency in light of the chaotic day in markets.