Pound (GBP) Dented by Lockdown
The Pound (GBP) got off to a poor start this week, trending lower through Monday’s trading session in anticipation the UK was preparing for a coronavirus lockdown.
These suspicions were confirmed in the evening, with Boris Johnson announcing strict new quarantines measures, which are likely to hit domestic growth particularly hard.
Coming up the UK’s latest PMI figures will be watched closely by GBP investors this morning. Will the UK government’s approach to the coronavirus crisis have helped limit the damage to the private sector?
Euro (EUR) as US Dollar Slips
The Euro (EUR) roared higher on Monday, mostly on the back of widespread weakness in the US Dollar (USD).
Also supportive of the Euro was the publication of the Eurozone’s latest consumer confidence survey which (despite a sharp fall) actually performed better-than-expected this month.
Of all the PMI releases today, the Eurozone’s are most likely to be in the spotlight.
Economists are forecasting private sector growth plummeted to a new record low this month as a result of the strict quarantine measures put in place throughout the bloc, something which is likely to take its toll on the Euro.
US Dollar (USD) Slips as Fed Launches New Stimulus
The US Dollar (USD) faced some headwinds at the start of this week’s session as the Federal Reserve announced new measures to help limit the economic impact of the coronavirus crisis.
The latest plan is effectively an unlimited quantitative easing programme, with the Fed pledging to purchase as many government bonds and mortgage-backed securities as needed to support the US economy.
While not given as much weight as the ISM surveys, this afternoon will see the publication of Markit’s preliminary PMI figures for the US, potentially limiting the appeal of the US Dollar if the private sector is shown to have slowed more than expected last month.
Canadian Dollar (CAD) Undermined by Weak Oil Prices
The Canadian Dollar (CAD) trended lower on Monday, with the oil sensitive ‘Loonie’ struggling as WTI crude briefly fell below $21 a barrel as global demand continued to fall due to the coronavirus crisis.
Australian Dollar (AUD) Rallies on RBA Stimulus
The Australian Dollar (AUD) surged in overnight trade, with the weakness of the US Dollar (USD) and the Reserve Bank of Australia’s (RBA) announcement of additional bond purchases helping to bolster the appeal of the ‘Aussie’.
New Zealand Dollar (NZD) Supported by Improved Market Sentiment
The New Zealand Dollar (NZD) also trended higher last night, with a falling number of deaths in Italy and the Fed’s massive new stimulus measures both buoying market optimism.