The US dollar fell to two-week lows against its major rivals yesterday after concerns over the US economy’s resilience sapped USD demand.
The pound is putting on a mixed performance this morning, with GBP/EUR steady at €1.0747 and GBP/USD rallying to $1.1639. GBP/CAD has climbed to C$1.6782, while GBP/AUD and GBP/NZD have retreated to AU$1.9723 and NZ$2.0179 respectively.
Coming up, the publication of March’s preliminary PMI figures will provide investors with their first real insight into how the coronavirus is impacting major economies.
What’s been happening?
The US dollar stumbled on Monday, with the US currency coming under pressure following the announcement of an aggressive new stimulus plan from the Federal Reserve.
The new measures involve the Fed greatly expanding its quantitative easing programme, with a vow to purchase as many government bonds as needed to support the US economy through the coronavirus crisis.
The Fed’s statement read:
‘The Federal Open Market Committee (FOMC) will purchase Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.’
This weakness in the US dollar helped bolster demand for the euro, which also found support after Eurozone consumer confidence fell less-than-expected this month.
Meanwhile, the pound came under pressure yesterday as Boris Johnson announced strict new quarantine measures in an effort to stop the spread of the coronavirus.
What’s coming up?While there has been much speculation over the economic impact of the coronavirus, it has been largely guesswork so far as most economic data remains on a time lag.
That’s why investors are eagerly awaiting preliminary PMI figures from Markit. The data will provide the first real insight into how the UK, US and Eurozone economies are faring this month.
In the UK and US analysts are predicting a notable slowdown as both countries slowly restricted economic activity throughout the month.
However, in the Eurozone, which has been in almost a full lockdown since the start of the month, EUR investors are bracing for some dire figures, with forecasts that private sector growth will have plummeted to a record low.
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)