Currency News: Markets Brace for Exchange Rate Volatility as Coronavirus Prompts Fed to Slash Rates Again

Pound (GBP) Dented by Brexit Jitters

The Pound (GBP) continued to trend lower at the end of last week’s session after the EU’s draft trade treaty with the UK highlighted the distance between the two sides on a number of key issues.

Brussels is seeking to guarantee ‘uniform implementation’ of EU rules on state aid, with the European court of justice overriding the British courts in any rulings.

GBP investors fear such terms will be unacceptable to the UK government, increasing the odds of a no-deal Brexit at the end of 2020.

Looking to the week ahead, it’s likely GBP investors will be mostly focused on the UK’s coronavirus situation and whether the UK government plans to step up its measures to limit the spread of the disease.

Euro (EUR) Stumbles as EU Announces Multi-Billion Fund to Tackle Coronavirus

The Euro (EUR) retreated on Friday, as European commission President Ursula von der Leyen pledged a €37bn coronavirus ‘investment initiative’.

Describing the coronavirus pandemic as ‘a major shock’ to Europe’s economies, der Leyen also provided more details on plans to loosen rules on state aid and introduce more flexibility regarding EU budget rules.

Meanwhile, the coming week could see the Euro come under pressure if more of Europe grinds to a halt as governments take drastic measures to control the coronavirus outbreak.

US Dollar (USD) Soars amid Coronavirus Fears

The US Dollar (USD) remained in high demand at the end of last week’s session, with investors continuing to flock to the safe-haven currency as coronavirus fears drove market sentiment.

Meanwhile, the ‘Greenback’ is facing some headwinds at the start of this week after the Federal Reserve made the unprecedented move to implement a second emergency rate cut over the weekend, slashing rates to near zero.

However, the US Dollar is likely to remain an attractive prospect for investors so long as the coronavirus continues to dominate headlines, with safe-haven flows likely to prop up the ‘Greenback’.

Canadian Dollar (CAD) Buoyed by Rebound in Oil Prices

The Canadian Dollar (CAD) ticked higher on Friday, with the oil-sensitive ‘Loonie’ finding itself back in demand as crude prices began to rebound.

Australian Dollar (AUD) Tumbles in Risk-Off Trade

The Australian Dollar (AUD) is off to a poor start this week, with the risk-sensitive currency shunned by investors as markets grow increasingly skittish regarding the coronavirus.

New Zealand Dollar (NZD) Sinks amid Coronavirus Fears

The New Zealand Dollar (NZD) is also on the back foot this morning, with the ‘Kiwi’ having retreated during the Asian session amid risk-off trade.



Matthew Andrews

Contact Matthew Andrews