The outbreak of the coronavirus pandemic resulted in severe disruption to the global shipping industry in early 2020, with traditional supply chains being severed as countries began to close their borders. The consequences of which have seen the cost of shipping increase by well over 400% during the pandemic.
- Pound supported by falling odds of BoE rate cut
- US dollar stumbles as factory orders fall
- OPEC oil production cut fails to shore up Canadian dollar
Hopes of budget stimulus buoy pound
With the Bank of England (BoE) appearing less likely to cut interest rates imminently, in spite of cuts from other central banks, the mood towards the pound improved.
Concerns over the outlook of the UK economy remain but weren’t enough to drag GBP exchange rates lower.
Increasing hopes that the upcoming budget will deliver fiscal stimulus to ease the impact of Covid-19 also helped shore up the pound against its rivals.
A lack of UK data could limit GBP movement today.
US dollar vulnerable to underwhelming payrolls report
Support for the US dollar diminished in the wake of January’s factory orders data, which confirmed a modest -0.1% contraction on the month.
This decline is fresh evidence of the world’s largest economy losing momentum in the first quarter, fuelling bets for the potential for further Federal Reserve monetary loosening.
Any fresh disappointment from this afternoon’s non-farm payrolls report could put additional pressure on USD exchange rates.
Rising unemployment set to weigh on Canadian dollar
Although the Organisation of Petroleum Exporting Countries (OPEC) signalled its plans to slash oil production once again this failed to push the Canadian dollar higher.
Demand for the risk-sensitive Canadian dollar remained generally muted yesterday as fears over the disruption caused by the Covid-19 outbreak persisted.
Further selling pressure could be in store for CAD exchange rates today if February’s Canadian unemployment rate picks up as forecast.
Evidence of a loosening labour market would be a fresh blow to confidence in the domestic economy, leaving the Canadian dollar vulnerable to another bout of weakness.
Friday, 6th March 2020
13:30 USD Non-Farm Payrolls
13:30 CAD Unemployment Rate
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)