Pound (GBP) Jumps as Boe Takes Action
After nosediving on Wednesday, the Pound (GBP) mounted a dramatic comeback yesterday as the Bank of England (BoE) announced its second emergency rate cut in a little over a week.
In an effort to limit the economic fallout from the coronavirus crisis, the BoE slashed rates to 0.1% – the lowest on record – and announced it would be expanding its quantitative easing programme by a further £200bn.
GBP investors welcomed the move, hoping it will help lower borrowing costs for businesses and the government.
The Pound then extended these gains into today’s session on reports Chancellor Rishi Sunak is preparing a fresh stimulus package aimed at protecting jobs and wages.
Euro (EUR) Tumbles on Fears of a Deep Recession
The Euro (EUR) plummeted to new multi-year lows on Thursday in response to continued USD strength as well as growing concerns over the state of the Eurozone economy.
Despite the European Central Bank’s (ECB) announcement of a €750bn expansion of its quantitative easing programme on Wednesday, quarantine measures in place throughout much of the Eurozone have brought economic activity in the bloc to a standstill.
Expect the single currency to remain under pressure as EU governments discuss plans for possible extensions to the lockdown period.
US Dollar (USD) Gains Tempered by Fed Liquidity Measures and Surge in Jobless Claims
The US Dollar (USD) continued to accelerate yesterday, but at a much more modest pace than earlier in the week.
This came as Federal Reserve announced measures to provide access to an additional $450bn in US Dollar swap lines, cooling fears of a possible USD shortage.
Further limiting the upside in the ‘Greenback’ were US jobless claims, which highlighted a sharp surge in unemployment last week as the coronavirus crisis took hold.
Meanwhile the US Dollar could find itself on the back seat today as markets appear more upbeat about the situation following major interventions by central banks.
Canadian Dollar (CAD) Firms as Oil Prices Rebound
The Canadian Dollar (CAD) ticked higher on Thursday, with the oil-sensitive currency finding modest support as crude prices rebounded after several OPEC members called for action to cut production.
Australian Dollar (AUD) Buoyed by RBA Stimulus Announcement
The Australian Dollar (AUD) shot higher in overnight trade, recovering a good portion of its recent losses as the Reserve Bank of Australia (RBA) detailed its plans for its first round of quantitative easing.
New Zealand Dollar (NZD) Rallies on Calmer Markets
The New Zealand Dollar (NZD) also bounced back overnight on Thursday, with the risk-sensitive ‘Kiwi’ recovering as panic over the coronavirus showed signs of fading.